<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934<PAGE>
For The Transition Period from to
Commission Registrant; State of Incorporation; I. R. S. Employer
File Number Address; and Telephone Number Identification
No.
1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. 13-4922640
(A New York Corporation)
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
0-18135 AEP GENERATING COMPANY
(An Ohio Corporation) 31-1033833
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
1-3457 APPALACHIAN POWER COMPANY
(A Virginia Corporation) 54-0124790
40 Franklin Road, Roanoke, Virginia 24011
Telephone (703) 985-2300
1-2680 COLUMBUS SOUTHERN POWER COMPANY
(An Ohio Corporation) 31-4154203
215 North Front Street, Columbus, Ohio 43215
Telephone (614) 464-7700
1-3570 INDIANA MICHIGAN POWER COMPANY
(An Indiana Corporation) 35-0410455
One Summit Square
P.O. Box 60, Fort Wayne, Indiana 46801
Telephone (219) 425-2111
1-6858 KENTUCKY POWER COMPANY
(A Kentucky Corporation) 61-0247775
1701 Central Avenue, Ashland, Kentucky 41101
Telephone (606) 327-1111
1-6543 OHIO POWER COMPANY
(An Ohio Corporation) 31-4271000
301 Cleveland Avenue S.W., Canton, Ohio 44702
Telephone (216) 456-8173
AEP Generating Company, Columbus Southern Power Company and
Kentucky Power Company meet the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and are therefore
filing this Form 10-Q with the reduced disclosure format
specified in General Instruction H(2) to Form 10-Q.
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrants were required to
file and (2) have been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares outstanding of American Electric Power
Company, Inc. Common Stock, par value $6.50, at July 31, 1994 was
184,535,000.
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended June 30, 1994
INDEX
Part I. FINANCIAL INFORMATION
American Electric Power Company, Inc. and Subsidiary Companies:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . .
Notes to Consolidated Financial Statements. . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition. . . . . . . . . .
AEP Generating Company:
Statements of Income and Statements of Retained
Earnings . . . . . . . . . . . . . . . . . . . . . .
Balance Sheets . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows . . . . . . . . . . . . . . .
Notes to Financial Statements. . . . . . . . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . .
<PAGE>
Appalachian Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition.. . . . . . . . .
Columbus Southern Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . .
Indiana Michigan Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . .
Kentucky Power Company:
Statements of Income and Statements of Retained
Earnings . . . . . . . . . . . . . . . . . . . . . .
Balance Sheets . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows . . . . . . . . . . . . . . .
Notes to Financial Statements. . . . . . . . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . .
Ohio Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . .
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended June 30, 1994
INDEX
Part II. OTHER INFORMATION
Item 1 . . . . . . . . . . . . . . . . . . . .
Item 4 . . . . . . . . . . . . . . . . . . . .
Item 5 . . . . . . . . . . . . . . . . . . . .
Item 6 . . . . . . . . . . . . . . . . . . . .
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . .
This combined Form 10-Q is separately filed by American
Electric Power Company, Inc., AEP Generating Company, Appalachian
Power Company, Columbus Southern Power Company, Indiana Michigan
Power Company, Kentucky Power Company and Ohio Power Company.
Information contain herein relating to any individual registrant
is filed by such registrant on its own behalf. Each registrant
makes no representation as to information relating to the other
registrants.
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $1,348,563 $1,210,398 $2,836,747 $2,531,847
OPERATING EXPENSES:
Fuel and Purchased Power . . . . . . . 430,823 366,345 932,392 778,703
Other Operation. . . . . . . . . . . . 244,398 236,417 490,730 468,308
Maintenance. . . . . . . . . . . . . . 132,165 134,132 275,527 263,496
Depreciation and Amortization. . . . . 142,611 132,183 281,442 262,732
Taxes Other Than Federal Income Taxes. 121,963 114,211 250,183 235,304
Federal Income Taxes . . . . . . . . . 57,176 31,914 129,597 87,143
TOTAL OPERATING EXPENSES . . . 1,129,136 1,015,202 2,359,871 2,095,686
OPERATING INCOME . . . . . . . . . . . . 219,427 195,196 476,876 436,161
NONOPERATING INCOME (LOSS):
Deferred Zimmer Plant Carrying
Charges (net of tax) . . . . . . . . 1,139 6,649 3,558 15,943
Other. . . . . . . . . . . . . . . . . (7,422) 4,453 (2,601) 11,122
TOTAL NONOPERATING INCOME
(LOSS) . . . . . . . . . . . (6,283) 11,102 957 27,065
INCOME BEFORE INTEREST CHARGES AND
PREFERRED DIVIDENDS. . . . . . . . . . 213,144 206,298 477,833 463,226
INTEREST CHARGES . . . . . . . . . . . . 96,036 105,308 194,607 214,089
PREFERRED STOCK DIVIDEND REQUIREMENTS
OF SUBSIDIARIES. . . . . . . . . . . . 13,315 14,771 26,478 29,860
NET INCOME . . . . . . . . . . . . . . . $ 103,793 $ 86,219 $ 256,748 $ 219,277
AVERAGE NUMBER OF SHARES OUTSTANDING . . 184,535 184,535 184,535 184,535
EARNINGS PER SHARE . . . . . . . . . . . $0.56 $0.47 $1.39 $1.19
CASH DIVIDENDS PAID PER SHARE. . . . . . $0.60 $0.60 $1.20 $1.20
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $1,311,401 $1,381,096 $1,269,283 $1,358,800
NET INCOME . . . . . . . . . . . . . . . 103,793 86,219 256,748 219,277
DEDUCTIONS:
Cash Dividends Declared. . . . . . . . 110,722 110,722 221,445 221,445
Other. . . . . . . . . . . . . . . . . 436 63 550 102
BALANCE AT END OF PERIOD . . . . . . . . $1,304,036 $1,356,530 $1,304,036 $1,356,530
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
<S> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $ 9,026,405 $ 9,079,130
Transmission . . . . . . . . . . . . . . . . . . . . 3,207,212 3,169,347
Distribution . . . . . . . . . . . . . . . . . . . . 3,825,289 3,743,047
General (including mining assets and nuclear fuel) . 1,482,872 1,406,159
Construction Work in Progress. . . . . . . . . . . . 317,102 314,489
Total Electric Utility Plant . . . . . . . . 17,858,880 17,712,172
Accumulated Depreciation and Amortization. . . . . . 6,648,087 6,612,131
NET ELECTRIC UTILITY PLANT . . . . . . . . . 11,210,793 11,100,041
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 732,069 724,373
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 32,346 42,561
Accounts Receivable. . . . . . . . . . . . . . . . . 480,156 467,813
Allowance for Uncollectible Accounts . . . . . . . . (5,103) (4,048)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 285,041 314,441
Materials and Supplies . . . . . . . . . . . . . . . 207,799 207,373
Accrued Utility Revenues . . . . . . . . . . . . . . 152,843 169,905
Prepayments and Other. . . . . . . . . . . . . . . . 132,069 98,958
TOTAL CURRENT ASSETS . . . . . . . . . . . . 1,285,151 1,297,003
REGULATORY ASSETS:
Amounts Due From Customers For
Future Federal Income Taxes. . . . . . . . . . . . 1,360,858 1,363,802
Other. . . . . . . . . . . . . . . . . . . . . . . . 924,952 856,182
TOTAL REGULATORY ASSETS. . . . . . . . . . . 2,285,810 2,219,984
TOTAL. . . . . . . . . . . . . . . . . . . $15,513,823 $15,341,401
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock-Par Value $6.50; Shares Authorized -
300,000,000; Shares Issued - 193,534,992, of
which 8,999,992 were held in the treasury. . . . . $ 1,257,977 $ 1,257,977
Paid-in Capital. . . . . . . . . . . . . . . . . . . 1,623,782 1,625,068
Retained Earnings. . . . . . . . . . . . . . . . . . 1,304,036 1,269,283
Total Common Shareowners' Equity . . . . . . 4,185,795 4,152,328
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption. . . . . . . . 233,240 268,240
Subject to Mandatory Redemption. . . . . . . . . . 590,450 500,450
Long-term Debt . . . . . . . . . . . . . . . . . . . 4,849,189 4,964,060
TOTAL CAPITALIZATION . . . . . . . . . . . . 9,858,674 9,885,078
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 613,664 509,317
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 55,584 31,141
Short-term Debt. . . . . . . . . . . . . . . . . . . 367,303 278,976
Accounts Payable . . . . . . . . . . . . . . . . . . 245,400 259,145
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 325,747 409,198
Interest Accrued . . . . . . . . . . . . . . . . . . 85,534 91,161
Obligations Under Capital Leases . . . . . . . . . . 83,324 62,215
Other. . . . . . . . . . . . . . . . . . . . . . . . 372,984 338,988
TOTAL CURRENT LIABILITIES. . . . . . . . . . 1,535,876 1,470,824
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 2,461,642 2,468,015
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 471,107 487,501
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 422,659 430,091
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 150,201 90,575
CONTINGENCIES (Note 5)
TOTAL. . . . . . . . . . . . . . . . . . . $15,513,823 $15,341,401
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 256,748 $ 219,277
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 278,790 279,052
Deferred Federal Income Taxes. . . . . . . . . . . . . . (3,429) (37,265)
Deferred Investment Tax Credits. . . . . . . . . . . . . (16,302) (12,585)
Amortization of Deferred Property Taxes. . . . . . . . . 59,910 61,324
Changes in Certain Current Assets and Liabilities:
Special Deposits - Restricted Funds. . . . . . . . . . . - 16,316
Accounts Receivable (net). . . . . . . . . . . . . . . . (11,288) 9,399
Fuel, Materials and Supplies . . . . . . . . . . . . . . 28,974 (5,193)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 17,062 65,296
Prepayments and Other Current Assets . . . . . . . . . . (33,111) (39,687)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (13,745) (34,617)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (83,451) (22,116)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (50,802) 19,490
Net Cash Flows From Operating Activities . . . . . . 429,356 518,691
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (292,509) (248,657)
Proceeds from Sale of Property and Other . . . . . . . . . 37,608 (1,476)
Net Cash Flows Used For Investing Activities . . . . (254,901) (250,133)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 88,787 59,095
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 335,771 578,252
Change in Short-term Debt (net). . . . . . . . . . . . . . 88,327 74,221
Retirement of Cumulative Preferred Stock . . . . . . . . . (35,800) (63,952)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (440,310) (739,398)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (221,445) (221,445)
Net Cash Flows Used For Financing Activities . . . . (184,670) (313,227)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (10,215) (44,669)
Cash and Cash Equivalents at Beginning of Period . . . . . . 42,561 128,896
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 32,346 $ 84,227
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $194,515,000 and $213,479,000
and for income taxes was $146,597,000 and $94,970,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $116,161,000 and $21,720,000 in 1994
and 1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. RATE MATTERS
Rate Activity
On June 27, 1994, the Virginia State Corporation
Commission issued a final order granting Appalachian Power
Company (APCo) an annual increase in revenues of $17.9
million. APCo had requested to increase its Virginia retail
rates by $31.4 million annually and on May 4, 1993,
implemented the rates, subject to refund, based on an
interim order. As a result of the final order, APCo will
make a revenue refund to its customers by September 1, 1994
of $15.8 million. The refund will not impact future results
of operations.
On July 6, 1994, Ohio Power Company (OPCo) filed an
application to increase base retail rates with the Public
Utilities Commission of Ohio (PUCO) seeking a $152.5 million
or 13.8% increase in annual revenues. More than half of the
increase reflects recovery of costs associated with Gavin
Plant's flue gas desulfurization system and other costs
associated with meeting environmental restrictions imposed
by the Clean Air Act Amendments of 1990 (CAAA). The
remainder of the request seeks to recover increased service
costs since the last base rate increase in July 1986; an
increase in depreciation rates which includes recovery on a
remaining life basis of the cost of plant and equipment and
the cost of removal of plant and equipment; and recovery of
costs associated with pressurized fluidized bed combustion
research and development as well as energy conservation
demand-side management programs.
Recovery of Fuel Costs
In May 1994 the PUCO issued an order to OPCo related to
fuel costs included in the electric fuel component (EFC)
rate for retail customers for the period beginning December
1, 1992 through November 30, 1993. As part of the EFC
review, the PUCO ruled that a 1993 dragline lease buyout by
a subsidiary, Central Ohio Coal Company (COCCo), was a
proper coal expense to be passed through the EFC. However,
the PUCO denied recovery of the buyout as a component of
affiliated coal cost during the fuel period under review.
The PUCO ruled that the cost should have been included in
fuel costs in 1991 when the dragline was idled. However,
the cost would not have been recovered since OPCo's fuel
costs in 1991 were already in excess of a PUCO ordered price
cap. As a result a fuel cost disallowance was recorded in
June 1994 resulting in an adverse impact on net income of
$4.3 million net of taxes.
<PAGE>
The PUCO also reviewed the 1992 sale of OPCo's Martinka
mining operation and a 20-year coal supply contract with an
affiliate of the buyer. Although the PUCO auditor found
that the sale of the Martinka mine was reasonable, the PUCO
stated that its responsibility is not to approve such
transactions but to determine if fuel acquisition and
delivery costs are fair and reasonable during the audit
period. The PUCO found that the cost of the coal contract
was reasonable during the fuel period under review.
The PUCO strongly recommended that another subsidiary,
Windsor Coal Company, not supply coal to OPCo's Cardinal
Unit 1 after the January 1995 commencement of Phase I of the
CAAA. AEP's systemwide PUCO approved CAAA Phase I
compliance plan includes continued use of Windsor coal at
Cardinal Unit 1 until the commencement of Phase II of the
CAAA in January 2000. The PUCO also recommended that OPCo
commence negotiations with customers regarding the recovery
of its investment in the affiliated Windsor and COCCo mines.
Unless the cost of affiliated mine closures can be recovered
from customers, results of operations and financial
condition would be adversely affected.
3. FINANCING AND RELATED ACTIVITIES
In June 1994 subsidiaries issued a $40 million series of
7.63% First Mortgage Bonds due in 2001 and two series of
Cumulative Preferred Stock, $30 million at 6.85% and $25
million at 7%.
4. VALUATION OF SECURITIES
On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities, (SFAS
115) which requires fair value accounting for investments in
equity securities with readily determinable market values
and investments in debt securities except those that the
reporting enterprise has the positive intent and ability to
hold to maturity. Debt securities not classified as held-
to-maturity, shall be classified as trading or available-
for-sale. Investments held in trust for decommissioning
nuclear facilities and for disposal of spent nuclear fuel
were classified as available-for-sale under SFAS 115. SFAS
115 requires that unrealized gains and losses on investments
classified as available-for-sale should be reported as a
separate component of shareholder's equity. However, due to
the rate-making process, SFAS 115 adjustments for unrealized
gains and losses to the carrying value of investments held
in the trusts will result in corresponding adjustments to
the nuclear decommissioning liability and the regulatory
asset for future recovery of spent nuclear fuel disposal
costs.
The cumulative effect of adopting SFAS 115 on January 1,
1994 resulted in an increase in the decommissioning and
spent nuclear fuel trust fund assets of $20.4 million
comprised of an unrealized holding gain of $21.4 million and
an unrealized holding loss of $1 million, with no effect on
net income and/or shareholder's equity. In accordance with
SFAS 115, prior year amounts were not restated.
<PAGE>
The trust investments reported in other property and
investments had a fair value of $321 million at January 1,
1994 and consist primarily of long-term tax-exempt municipal
bonds. At January 1, 1994, the maturities of investments in
debt securities ranged from 1994 to 2024.
5. CONTINGENCIES
Kammer Plant
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to OPCo alleging that the Kammer Plant has been
operating in violation of applicable federally enforceable
air pollution control requirements since January 1, 1989.
The Clean Air Act provides that Federal EPA may, after the
expiration of 30 days following the issuance of the NOV,
commence a civil action for injunctive relief and/or civil
penalties of up to $25,000 per day for each day of
violation. OPCo is entering into discussions with Federal
EPA in an effort to resolve the issue of the appropriate
sulfur dioxide emission limits for the Kammer Plant. At
this time management is unable to determine the ultimate
impact of this matter on results of operations and financial
condition.
Proposed Changes in Regulation
The Public Utility Holding Company Act of 1935 (1935
Act) is being reviewed by the Securities and Exchange
Commission (SEC) and Congress for possible revision.
Amendments being considered could alter the policy for
pricing affiliated transactions under the 1935 Act and
result in the application of a lower of cost or market test
to determine the allowed price for affiliated company trans-
actions. Included in provisions being considered in the
legislation is a grandfathering feature that would exempt
contracts between affiliates entered into before the passage
of the legislation. Unless the Company's affiliated coal
mining contracts are exempted, passage of such legislation
or revisions of the SEC regulations under the 1935 Act could
negatively impact the Company's ability to recover its cost
of affiliated coal mining operations. The inability to
recover such costs including any shutdown costs would
adversely affect results of operations and possibly
financial condition.
Other
The Company continues to be involved in certain other
matters discussed in the 1993 Annual Report.
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income increased 20% or $17.6 million in the second
quarter and 17% or $37.5 million in the year-to-date period
primarily due to increased sales; rate increases in several
jurisdictions; and decreased interest expense due to the
refinancing of debt at lower interest rates. The favorable
effect on net income of the weather and rate increases was partly
offset by excessive winter storm damage of $46 million of which
$23.5 million was deferred in the Virginia jurisdiction for
future recovery; a fuel cost disallowance of $4.3 million after
tax related to the idling of the affiliated Big Muskie dragline;
the inability to recover the cost of idling a second affiliated
dragline under certain major industrial contracts which do not
provide for the direct recovery of such costs; and a $8.2 million
after tax provision for loss recorded in the second quarter of
1994 for a demand side management investment.
Income statement lines which changed significantly were:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues. . . . . . . $138.2 11 $304.9 12
Fuel and Purchased
Power Expense . . . . . . . . 64.5 18 153.7 20
Depreciation and
Amortization Expense. . . . . 10.4 8 18.7 7
Taxes Other Than
Federal Income Taxes. . . . . 7.8 7 14.9 6
Federal Income Taxes. . . . . . 25.3 79 42.5 49
Deferred Zimmer Plant Carrying
Charges (net of tax). . . . . (5.5) (83) (12.4) (78)
Other Nonoperating Income . . . (11.9) N.M. (13.7) N.M.
Interest Charges. . . . . . . . (9.3) (9) (19.5) (9)
N.M. = Not Meaningful
The substantial increase in operating revenues in both
periods was due to retail rate increases, increased energy usage
reflecting severe weather and growth in industrial energy
requirements. The AEP System set an all-time peak demand for
energy as a result of the unseasonably hot weather in June 1994
and a new winter peak demand for energy in January 1994 as a
result of the extremely cold winter weather. The retail rate
increases were in the Indiana, Michigan, Ohio and Virginia
jurisdictions. As a result of the severe winter weather and hot
June, energy sales to residential and commercial customers
increased 4% and 6%, respectively, in the quarter and 7% and 5%,
respectively, in the year-to-date period. Growth in the number
of customers and increased energy usage accounted for the
increase in industrial sales.
Wholesale energy sales volume increased 11% in the quarter
and 18% for the year-to-date period due to increased sales to
unaffiliated utilities by the AEP System Power Pool resulting
from the unseasonable weather and forced outages at unaffiliated
generating units.
In both periods fuel and purchased power expense increased
significantly due to the weather-related increase in energy
consumption which increased generation and energy purchases from
unaffiliated utilities for immediate pass-through sales to other
unaffiliated utilities. Also contributing to the rise in fuel
expense during both periods was the cost of idling two affiliated
draglines and increased utilization of coal-fired generation due
to a reduction in low-cost nuclear generation resulting from a
refueling outage at one nuclear unit and a maintenance outage at
the other nuclear unit.
The increase in depreciation and amortization expense was
primarily due to the amortization of Zimmer Plant phase-in costs
which increased sharply due to a court ordered cessation of
phase-in plan deferrals in February 1994 and their subsequent
amortization, commensurate with their recovery.
The increase in taxes other than federal income tax expense
was primarily due to increased West Virginia business and
occupation tax on generation reflecting the increase in
generation at West Virginia power plants and an increase in Ohio
real and personal property taxes due to an increase in valuation
and tax rates.
Federal income tax expense attributable to operations
increased primarily due to an increase in pre-tax operating
income.
Deferred Zimmer Plant carrying charges declined from the
prior year since the carrying charges in 1994 were accrued on the
unamortized phase-in plan deferral balance while the 1993
carrying charges were accrued on the larger Zimmer Plant
investment not yet phased into rates.
The decrease in the quarter and year-to-date periods in
other nonoperating income was mainly due to a subsidiary, AEP
Investments, Inc., recording a provision for loss of $8.2 million
after tax in June 1994 on a demand side management investment.
Also contributing to the decrease in the year-to-date period was
the effect of interest income recorded in March 1993 on tax
refunds received from the Internal Revenue Service in connection
with the settlement of audits of prior years' tax returns.
Refinancing programs of several major subsidiaries during
1993 reduced the average interest rate on outstanding long-term
debt in 1994 and also decreased the principal amount of long-term
debt outstanding resulting in the decline in interest expense in
both periods.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first six months of 1994 were $411 million.
During the first six months subsidiaries issued $335 million
principal amount of long-term debt at interest rates ranging from
3.725% (variable) to 7.63% and three series of cumulative
preferred stock: $35 million at 6.30%, $30 million at 6.85% and
$25 million at 7%. Subsidiaries retired $432 million principal
amount of long-term debt with interest rates ranging from 5-1/8%
to 9-7/8%; redeemed $35 million of $100 par value 7.76%
cumulative preferred stock; and increased short-term debt by $88
million since the beginning of the year.
RECOVERY OF FUEL COSTS
In May 1994 the Public Utilities Commission of Ohio (PUCO)
issued an order to Ohio Power Company (OPCo) related to fuel
costs included in the electric fuel component (EFC) rate for
retail customers for the period beginning December 1, 1992
through November 30, 1993. As part of the EFC review, the PUCO
ruled that a 1993 dragline lease buyout by a subsidiary, Central
Ohio Coal Company (COCCo), was a proper coal expense to be passed
through the EFC. However, the PUCO denied recovery of the buyout
as a component of affiliated coal cost during the fuel period
under review. The PUCO ruled that the cost should have been
included in fuel costs in 1991 when the dragline was idled.
However, the cost would not have been recovered since OPCo's fuel
costs in 1991 were already in excess of a PUCO ordered price cap.
As a result a fuel cost disallowance was recorded in June 1994
resulting in an adverse impact on net income of $4.3 million net
of taxes.
In June 1994 COCCo idled another leased dragline and shovel
and bought out the lease. Management concluded that this mining
equipment would no longer be needed due to the Muskingum River
Plant's Clean Air Act Amendments of 1990 (CAAA) compliance plan
to use low sulfur coal from unaffiliated sources. The idling of
this equipment and related lease buyout are not expected to have
a material effect on future results of operations.
The PUCO also reviewed the 1992 sale of OPCo's Martinka
mining operation and a 20-year coal supply contract with an
affiliate of the buyer. Although the PUCO auditor found that the
sale of the Martinka mine was reasonable, the PUCO stated that
its responsibility is not to approve such transactions but to
determine if fuel acquisition and delivery costs are fair and
reasonable during the audit period. The PUCO found that the cost
of the coal contract was reasonable during the fuel period under
review.
The PUCO strongly recommended that another subsidiary,
Windsor Coal Company, not supply coal to OPCo's Cardinal Unit 1
after the January 1995 commencement of Phase I of the CAAA.
AEP's systemwide PUCO approved CAAA Phase I compliance plan
includes continued use of Windsor coal at Cardinal Unit 1 until
the commencement of Phase II of the CAAA in January 2000. The
PUCO also recommended that OPCo commence negotiations with
customers regarding the recovery of its investment in the
affiliated Windsor and COCCo mines. Unless the cost of
affiliated mine closures can be recovered from customers, results
of operations and financial condition would be adversely
affected.
RATE ACTIVITY
On July 6, 1994, OPCo filed with the PUCO for an annual
revenue increase of $152.5 million. More than half of the
requested rate increase is to recover costs associated with Gavin
Plant's flue gas desulfurization system (scrubbers) and other
costs resulting from complying with CAAA. The remainder of the
increase is to recover the additional cost of providing service
to customers since the last base rate increase in July of 1986;
increased depreciation rates for investment in plant and equip-
ment based on a remaining life method and recovery of site
specific removal costs; and recovery of costs associated with
pressurized fluidized bed combustion research and development and
energy conservation demand-side management programs.
NOTICE OF VIOLATION - KAMMER PLANT
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to OPCo alleging that the Kammer Plant has been operating
in violation of applicable federally enforceable air pollution
control requirements since January 1, 1989. By law the Federal
EPA may seek penalties of up to $25,000 per day for each day of
violation. OPCo is entering into discussions with Federal EPA in
an effort to resolve the issue of the appropriate sulfur dioxide
emission limits for the Kammer Plant. At this time management is
unable to determine the ultimate impact of this matter on results
of operations and financial condition.
PROPOSED CHANGES IN REGULATION
Congress is considering amendments to the Public Utility
Holding Company Act of 1935 (1935 Act) and the Securities and
Exchange Commission is considering amending its rules promulgated
under the 1935 Act. These amendments could alter the policy for
pricing affiliated transactions under the 1935 Act and result in
the application of a lower of cost or market test to determine
the allowed price for affiliated company transactions. Pro-
visions in the legislation being considered may create a
grandfathering feature that would exempt contracts between
affiliates entered into before the passage of the legislation.
The adoption of any new policy regarding pricing of affiliated
transactions could affect the Company's ability to recover the
costs of its affiliated mining operations.
NUCLEAR DECOMMISSIONING
The Financial Accounting Standards Board (FASB), on June 15,
1994, added Accounting for Nuclear Decommissioning Liabilities to
its agenda. Among the topics to be studied is the question of
when future decommissioning liabilities should be recognized.
The Company and the electric utility industry accrue such costs
over the service life of its facilities. Should the FASB decide
to require that the liability for such costs be recorded in full,
it is expected that the Company will be able to record a related
asset. As a result it is not expected that the FASB project will
materially affect results of operations or financial position.
FOREIGN PROJECTS
On June 27, 1994, AEP Resources International, LTD. (AEPRI)
signed an agreement of intent which could lead to a joint venture
with the Northeast China Electric Power Group Corporation (NEPG)
to finance, construct and operate two 1300-megawatt coal-fired
generating units (the Project) in Suizhong, Liaoning Province,
People's Republic of China (PRC).
Based on the agreement, if the decision is made to construct
the plants, the total investment by the joint venture in the
Project is currently estimated to be $2 billion U.S. dollars.
Each party to the joint venture will have an equity interest and
may represent other parties having equity interests in the joint
venture. It is intended that the aggregate equity interest by
NEPG and their parties to the joint venture will be 51% and that
the aggregate equity interest in the joint venture by AEPRI and
its parties to the joint venture will be 49%.
AEPRI has filed at the Federal Energy Regulatory Commission
(FERC) for authority to be an exempt wholesale generator to
operate and own an interest in the Project. American Electric
Power Company, Inc. and AEP Resources, Inc., the parent of AEPRI,
have filed with SEC under the 1935 Act for authority to raise up
to $300 million of debt or equity which may be invested in the
Project and other independent power projects.
The Project will build the largest coal-fired generating
units in Asia. Construction could begin within two years with
operation expected shortly after 2000.
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $59,530 $54,138 $119,431 $112,902
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 25,709 19,555 51,739 42,730
Rent - Rockport Plant Unit 2 . . . . . 16,574 16,574 33,152 33,188
Other Operation. . . . . . . . . . . . 2,680 2,838 5,283 5,498
Maintenance. . . . . . . . . . . . . . 2,790 3,335 5,575 6,673
Depreciation . . . . . . . . . . . . . 5,408 5,382 10,816 10,838
Taxes Other Than Federal Income Taxes. 1,403 1,359 2,492 2,971
Federal Income Taxes . . . . . . . . . 1,166 1,074 2,475 2,449
TOTAL OPERATING EXPENSES . . . 55,730 50,117 111,532 104,347
OPERATING INCOME . . . . . . . . . . . . 3,800 4,021 7,899 8,555
NONOPERATING INCOME. . . . . . . . . . . 868 1,121 1,685 2,520
INCOME BEFORE INTEREST CHARGES . . . . . 4,668 5,142 9,584 11,075
INTEREST CHARGES . . . . . . . . . . . . 2,392 2,747 4,817 5,424
NET INCOME . . . . . . . . . . . . . . . $ 2,276 $ 2,395 $ 4,767 $ 5,651
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $1,269 $19,232 $1,339 $23,173
NET INCOME . . . . . . . . . . . . . . . 2,276 2,395 4,767 5,651
CASH DIVIDENDS DECLARED. . . . . . . . . 2,360 7,197 4,921 14,394
BALANCE AT END OF PERIOD . . . . . . . . $1,185 $14,430 $1,185 $14,430
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production. . . . . . . . . . . . . . . . . . . . . . . . $625,816 $627,502
General . . . . . . . . . . . . . . . . . . . . . . . . . 2,702 1,757
Construction Work in Progress . . . . . . . . . . . . . . 2,223 1,773
Total Electric Utility Plant. . . . . . . . . . . 630,741 631,032
Accumulated Depreciation. . . . . . . . . . . . . . . . . 189,455 181,587
NET ELECTRIC UTILITY PLANT. . . . . . . . . . . . 441,286 449,445
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . 24 3
Accounts Receivable . . . . . . . . . . . . . . . . . . . 18,614 18,729
Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 15,264 12,867
Materials and Supplies. . . . . . . . . . . . . . . . . . 4,242 4,121
Prepayments . . . . . . . . . . . . . . . . . . . . . . . 579 731
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . 38,723 36,451
DEFERRED FEDERAL INCOME TAX ASSETS. . . . . . . . . . . . . 7,256 10,975
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . 32,010 30,536
TOTAL . . . . . . . . . . . . . . . . . . . . . $519,275 $527,407
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE> AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - Par Value $1,000:
Authorized and Outstanding - 1,000 Shares . . . . . . . $ 1,000 $ 1,000
Paid-in Capital . . . . . . . . . . . . . . . . . . . . . 50,335 54,435
Retained Earnings . . . . . . . . . . . . . . . . . . . . 1,185 1,339
Total Common Shareowner's Equity. . . . . . . . . 52,520 56,774
Long-term Debt. . . . . . . . . . . . . . . . . . . . . . 108,264 108,188
TOTAL CAPITALIZATION. . . . . . . . . . . . . . . 160,784 164,962
OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . . 2,181 1,736
CURRENT LIABILITIES:
Short-term Debt - Notes Payable . . . . . . . . . . . . . 10,250 15,250
Accounts Payable. . . . . . . . . . . . . . . . . . . . . 10,619 8,809
Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . 6,476 3,697
Interest Accrued. . . . . . . . . . . . . . . . . . . . . 2,955 2,963
Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . . 5,588 5,588
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,336 1,063
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 38,224 37,370
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . . 214,867 218,646
DEFERRED INVESTMENT TAX CREDITS . . . . . . . . . . . . . . 82,209 83,901
DEFERRED AMOUNTS DUE TO CUSTOMERS FOR
FEDERAL INCOME TAXES. . . . . . . . . . . . . . . . . . . 20,019 20,792
DEFERRED CREDITS. . . . . . . . . . . . . . . . . . . . . . 991 -
CONTINGENCIES (Note 2)
TOTAL . . . . . . . . . . . . . . . . . . . . . $519,275 $527,407
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 4,767 $ 5,651
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 10,816 10,838
Deferred Federal Income Taxes. . . . . . . . . . . . . . 2,945 1,899
Deferred Investment Tax Credits. . . . . . . . . . . . . (1,692) (1,695)
Amortization of Deferred Gain on Sale
and Leaseback - Rockport Plant Unit 2. . . . . . . . . (3,779) (3,779)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . . . . . 115 1,031
Fuel, Materials and Supplies . . . . . . . . . . . . . . (2,518) 2,408
Accounts Payable . . . . . . . . . . . . . . . . . . . . 1,810 393
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 2,779 12,878
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 849 (1,138)
Net Cash Flows From Operating Activities . . . . . . 16,092 28,486
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (2,050) (1,291)
FINANCING ACTIVITIES:
Capital Contributions Returned to Parent Company . . . . . (4,100) -
Change in Short-term Debt (net). . . . . . . . . . . . . . (5,000) -
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (4,921) (14,394)
Net Cash Flows Used For Financing Activities . . . . (14,021) (14,394)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 21 12,801
Cash and Cash Equivalents at Beginning of Period . . . . . . 3 27,974
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 24 $ 40,775
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $4,659,000 and
$5,294,000 and for income taxes was $(986,000) and $(9,550,000) in 1994 and
1993, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
AEP GENERATING COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should
be read in conjunction with the 1993 Annual Report as
incorporated in and filed with the Form 10-K.
2. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
AEP GENERATING COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Operating revenues are derived from the sale of Rockport
Plant energy and capacity to two affiliated companies and one
unaffiliated utility pursuant to Federal Energy Regulatory
Commission (FERC) approved long-term unit power agreements. The
unit power agreements provide for recovery of costs including a
FERC approved rate of return on common equity and a return on
other capital net of temporary cash investments. Net income
declined $0.1 million or 5% in the second quarter and $0.9
million or 16% in the year-to-date period reflecting a reduction
in common equity on which a return is earned and lower interest
income, offset in part by an increase in the return on other
capital due to significantly lower temporary cash investments
during 1994. The reduction in common equity resulted from the
payment of dividends in excess of net income as well as returns
of capital to the parent company.
Income statement items which changed significantly were as
follows:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues . . . . . $ 5.4 10 $ 6.5 6
Fuel Expense . . . . . . . . 6.2 31 9.0 21
Other Operation Expense. . . (0.2) (6) (0.2) (4)
Maintenance Expense. . . . . (0.5) (16) (1.1) (16)
Taxes Other Than Federal
Income Taxes . . . . . . . - - (0.5) (16)
Federal Income Taxes . . . . 0.1 9 - -
Nonoperating Income. . . . . (0.3) (23) (0.8) (33)
Interest Charges . . . . . . (0.4) (13) (0.6) (11)
The increase in operating revenues reflects the recovery of
increased fuel costs.
Fuel expense increased as generation increased 29% in the
second quarter and 9% in the year-to-date period. Generation was
lower in 1993 due to Rockport Plant Unit 2 being out-of-service
for routine maintenance in April and May of 1993. The effect of
a coal transportation cost refund received in the first quarter
of 1993 also contributed to the increase in comparative fuel
expense during the year-to-date period. Other operation expenses
decreased due to lower administrative and general costs. Higher
maintenance expense in 1993 due to planned boiler inspections and
repairs at both Rockport Plant units resulted in the decrease in
maintenance expense in 1994 as only one unit is scheduled for
maintenance during the current year. Taxes other than federal
income taxes decreased in the year-to-date period as a result of
an over accrual adjustment for Indiana property taxes recorded in
1993 and a reduction in Indiana supplemental net income taxes
reflecting reduced taxable income for state tax purposes. The
increase in federal income tax expense attributable to operations
in the second quarter was primarily due to an increase in pre-tax
operating income.
Nonoperating income decreased in both periods due to a
significant reduction in interest income as well as related tax
reflecting reduced temporary cash investments in 1994 as compared
to 1993. The reduction in year-to-date nonoperating income was
also caused by interest income recorded in March 1993 on prior
years' income tax refunds from the Internal Revenue Service. The
redemption of a $55 million installment purchase contract in
December 1993 accounted for the decline in interest charges.
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $369,862 $340,617 $807,957 $733,653
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 95,156 84,602 206,694 168,611
Purchased Power. . . . . . . . . . . . 76,741 71,540 171,604 163,294
Other Operation. . . . . . . . . . . . 45,875 47,878 94,467 93,078
Maintenance. . . . . . . . . . . . . . 30,419 29,557 70,996 57,793
Depreciation and Amortization. . . . . 31,670 30,583 63,182 61,090
Taxes Other Than Federal Income Taxes. 29,356 24,417 62,405 51,656
Federal Income Taxes . . . . . . . . . 11,983 7,167 30,005 25,511
TOTAL OPERATING EXPENSES . . . 321,200 295,744 699,353 621,033
OPERATING INCOME . . . . . . . . . . . . 48,662 44,873 108,604 112,620
NONOPERATING LOSS. . . . . . . . . . . . (853) (1,349) (3,543) (2,437)
INCOME BEFORE INTEREST CHARGES . . . . . 47,809 43,524 105,061 110,183
INTEREST CHARGES . . . . . . . . . . . . 23,801 25,096 48,521 50,201
NET INCOME . . . . . . . . . . . . . . . 24,008 18,428 56,540 59,982
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,688 4,216 7,280 8,455
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 20,320 $ 14,212 $ 49,260 $ 51,527
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $229,721 $240,507 $227,816 $229,920
NET INCOME . . . . . . . . . . . . . . . 24,008 18,428 56,540 59,982
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 27,035 26,729 54,070 53,458
Cumulative Preferred Stock . . . . . 3,674 4,100 7,081 8,222
Capital Stock Expense. . . . . . . . . 185 117 370 233
BALANCE AT END OF PERIOD . . . . . . . . $222,835 $227,989 $222,835 $227,989
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,811,296 $1,781,005
Transmission . . . . . . . . . . . . . . . . . . . . 994,139 987,147
Distribution . . . . . . . . . . . . . . . . . . . . 1,260,602 1,225,436
General. . . . . . . . . . . . . . . . . . . . . . . 154,322 140,942
Construction Work in Progress. . . . . . . . . . . . 69,310 59,170
Total Electric Utility Plant . . . . . . . . 4,289,669 4,193,700
Accumulated Depreciation and Amortization. . . . . . 1,592,104 1,550,855
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,697,565 2,642,845
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 49,718 51,551
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 3,894 4,626
Accounts Receivable (net). . . . . . . . . . . . . . 136,275 130,862
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 56,397 46,881
Materials and Supplies . . . . . . . . . . . . . . . 45,186 43,351
Accrued Utility Revenues . . . . . . . . . . . . . . 43,895 58,294
Prepayments. . . . . . . . . . . . . . . . . . . . . 14,993 7,430
TOTAL CURRENT ASSETS . . . . . . . . . . . . 300,640 291,444
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 316,712 320,160
Other. . . . . . . . . . . . . . . . . . . . . . . . 146,414 122,367
TOTAL REGULATORY ASSETS. . . . . . . . . . . 463,126 442,527
TOTAL. . . . . . . . . . . . . . . . . . . $3,511,049 $3,428,367
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 30,000,000 Shares
Outstanding - 13,499,500 Shares. . . . . . . . . . $ 260,458 $ 260,458
Paid-in Capital. . . . . . . . . . . . . . . . . . . 494,408 494,834
Retained Earnings. . . . . . . . . . . . . . . . . . 222,835 227,816
Total Common Shareowner's Equity . . . . . . 977,701 983,108
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 55,000 55,000
Subject to Mandatory Redemption. . . . . . . . . . 190,450 160,450
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,158,048 1,215,124
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,381,199 2,413,682
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 60,722 55,865
CURRENT LIABILITIES:
Short-term Debt. . . . . . . . . . . . . . . . . . . 115,150 39,500
Accounts Payable . . . . . . . . . . . . . . . . . . 94,586 68,158
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 39,452 52,128
Customer Deposits. . . . . . . . . . . . . . . . . . 13,761 13,670
Interest Accrued . . . . . . . . . . . . . . . . . . 16,405 18,212
Revenue Refunds Accrued. . . . . . . . . . . . . . . 15,846 -
Other. . . . . . . . . . . . . . . . . . . . . . . . 65,032 71,259
TOTAL CURRENT LIABILITIES. . . . . . . . . . 360,232 262,927
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 588,016 578,948
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 80,722 82,987
REGULATORY LIABILITIES AND DEFERRED CREDITS. . . . . . 40,158 33,958
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $3,511,049 $3,428,367
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 56,540 $ 59,982
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 64,453 62,308
Deferred Federal Income Taxes. . . . . . . . . . . . . . 12,492 (3,490)
Deferred Investment Tax Credits. . . . . . . . . . . . . (2,448) (2,463)
Deferred Power Supply Costs (net). . . . . . . . . . . . 5,959 15,213
Storm Damage Expense Deferrals (net) . . . . . . . . . . (22,803) (2,347)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (5,413) (6,088)
Fuel, Materials and Supplies . . . . . . . . . . . . . . (11,351) (10,701)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 14,399 14,489
Accounts Payable . . . . . . . . . . . . . . . . . . . . 26,428 (12,437)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (12,676) 1,668
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (9,467) 7,470
Net Cash Flows From Operating Activities . . . . . . 116,113 123,604
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (102,812) (80,614)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 29,574 -
Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 138,737
Change in Short-term Debt (net). . . . . . . . . . . . . . 75,650 1,900
Retirement of Long-term Debt . . . . . . . . . . . . . . . (58,221) (126,663)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (54,070) (53,458)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (6,966) (8,244)
Net Cash Flows Used For Financing Activities . . . . (14,033) (47,728)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (732) (4,738)
Cash and Cash Equivalents at Beginning of Period . . . . . . 4,626 9,501
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 3,894 $ 4,763
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $49,161,000 and $51,556,000 and
for income taxes was $27,781,000 and $27,937,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $13,773,000 and $5,460,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. RATE MATTERS
On June 27, 1994, the Virginia State Corporation
Commission issued a final order granting the Company an
annual increase in revenues of $17.9 million. The Company
had requested to increase its Virginia retail rates by $31.4
million annually and on May 4, 1993, implemented the rates,
subject to refund, based on an interim order. As a result
of the final order, the Company will make a revenue refund
to its customers by September 1, 1994 of $15.8 million. The
refund will not impact future results of operations.
3. FINANCING ACTIVITIES
In June 1994, the Company issued $30 million of $100
stated value 6.85% cumulative preferred stock.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income increased $5.6 million or 30% in the quarter due
to unseasonable weather and the favorable resolution of a rate
proceeding in the Virginia retail jurisdiction. Although severe
winter weather caused energy sales to increase substantially and
retail rates were increased in the Virginia jurisdiction, year-
to-date net income decreased $3.4 million or 6% primarily due to
excessive winter storm damage. In both periods the favorable
impact of the unseasonable weather on energy sales was partly
offset by increased capacity costs from the AEP System Power Pool
(Power Pool) and an increase in West Virginia business and
occupation taxes on generation reflecting a weather-related
increase in generation.
Income statement lines which changed significantly were:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues . . . . $29.2 9 $74.3 10
Fuel Expense . . . . . . . 10.6 12 38.1 23
Purchased Power Expense. . 5.2 7 8.3 5
Maintenance Expense. . . . 0.9 3 13.2 23
Taxes Other Than Federal
Income Taxes . . . . . . 4.9 20 10.7 21
Federal Income Taxes . . . 4.8 67 4.5 18
Nonoperating Loss. . . . . (0.5) (37) 1.1 45
Interest Charges . . . . . (1.3) (5) (1.7) (3)
The significant increase in operating revenues in both
periods was primarily due to increased energy demand by retail
and wholesale customers as a result of unseasonable weather
(severe winter weather in the first quarter of 1994 and
unseasonably hot weather in June 1994) and the effects of the
retail rate increase. Residential energy sales increased 1% in
the quarter and 6% in the year-to-date period; sales to
commercial customers rose 5% in both periods; and industrial
sales increased 3% in the quarter and 2% in the year-to-date
period. Wholesale energy sales increased as sales to
unaffiliated utilities, including the Company's share of sales to
unaffiliated utilities made by the Power Pool, increased as a
result of the unseasonable weather and outages at unaffiliated
generating units.
Fuel expense increased in both periods primarily due to an
increase in coal-fired generation reflecting the increased demand
for retail and wholesale energy and fewer maintenance outages
offset in part by a reduction in the average cost of fuel burned.
Increased energy purchases from unaffiliated utilities for
pass-through sales to other unaffiliated utilities resulted in
the increase in purchased power expense in both periods
reflecting the impact of severe winter weather in the first
quarter of 1994, hot weather in the second quarter and outages at
unaffiliated generating units on demand for wholesale energy.
Increased Power Pool capacity charges also contributed to
increased purchased power expense. The Power Pool allocates
capacity costs to its members based on their relative peak
demands in the prior twelve months. As a result of a new all-
time internal peak demand experienced in January 1994, the
Company is charged with a greater portion of the Power Pool's
capacity charges which are recorded as purchased power expense.
Until the Company is able to recover from its ratepayers the
increase in capacity charges, currently estimated to be $27
million for 1994 when compared to 1993, results of operations
will be adversely affected. The Company's ability to timely
recover the additional Power Pool capacity charges above those
currently in rates is affected by the time required to file and
receive a base rate increase in Virginia and the three-year rate
change moratorium in West Virginia ending October 31, 1996.
A January 1994 snow storm, primarily in the West Virginia
service territory, two major ice storms in February and March
1994, mainly in the Virginia service territory, and several other
smaller storms significantly increased year-to-date maintenance
expense. Storm damage expenditures from these storms in 1994 were
$43 million of which $23.5 million of Virginia jurisdictional
incremental expenses were deferred for future recovery as a
regulatory asset in accordance with a prior precedent. Should
the Company be unable to recover such deferrals in its next
Virginia rate case, results of operations would be adversely
impacted. The storm-related increases in maintenance expense
were partly offset by reduced generating plant maintenance.
Taxes other than federal income taxes increased primarily
due to the generation based West Virginia business and occupation
tax reflecting increased generation at West Virginia power plants
to meet the increase in demand.
The increase in federal income tax expense in both periods
was primarily due to an increase in pre-tax operating income and
changes in certain book/tax differences which are accounted for
on a flow-through basis for rate-making purposes. Under SFAS
109, Accounting for Income Taxes, deferred taxes associated with
book/tax differences flowed through to affect cost of service for
rate-making purposes are recorded on the balance sheet with a
corresponding regulatory asset or liability however, the current
effect of such items is reflected in the income statement.
The implementation of SFAS 112 Employers' Accounting for
Postemployment Benefits by the Company's subsidiaries which were
formerly engaged in coal-mining and the recordation of increased
retiree benefits expense by these subsidiaries resulted in the
year-to-date increase in nonoperating loss.
Interest expense decreased primarily as a result of
refinancing long-term debt at lower interest rates partly offset
by the effect of an increase in short-term debt and the accrual
of interest on the revenue refund.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first six months of 1994 were $117 million, a 35%
increase.
In March 1994, the Company redeemed the remaining $56.7
million outstanding balance of 8-3/4% Series First Mortgage Bonds
due in 2017. In June 1994, the Company issued $30 million of
$100 stated value 6.85% cumulative preferred stock. Outstanding
short-term debt increased $75.7 million from year-end levels.
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $256,754 $219,820 $512,583 $439,695
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 48,022 32,648 101,654 82,778
Purchased Power. . . . . . . . . . . . 35,249 44,695 74,645 78,285
Other Operation. . . . . . . . . . . . 44,318 40,038 86,862 80,756
Maintenance. . . . . . . . . . . . . . 16,780 17,288 32,608 33,795
Depreciation . . . . . . . . . . . . . 20,728 21,469 41,318 42,831
Amortization (Deferral) of Zimmer
Plant Phase-in Costs . . . . . . . . 7,466 (2,325) 10,851 (5,917)
Taxes Other Than Federal Income Taxes. 26,148 25,180 51,444 50,267
Federal Income Taxes . . . . . . . . . 13,520 7,691 25,210 13,804
TOTAL OPERATING EXPENSES . . . 212,231 186,684 424,592 376,599
OPERATING INCOME . . . . . . . . . . . . 44,523 33,136 87,991 63,096
NONOPERATING INCOME:
Deferred Zimmer Plant Carrying
Charges (net of tax). . . . . . . . . 1,139 6,649 3,558 15,943
Other. . . . . . . . . . . . . . . . . 317 1,416 998 2,490
TOTAL NONOPERATING INCOME. . . 1,456 8,065 4,556 18,433
INCOME BEFORE INTEREST CHARGES . . . . . 45,979 41,201 92,547 81,529
INTEREST CHARGES . . . . . . . . . . . . 20,737 22,551 42,653 44,649
NET INCOME . . . . . . . . . . . . . . . 25,242 18,650 49,894 36,880
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 2,911 2,765 5,677 5,531
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 22,331 $ 15,885 $ 44,217 $ 31,349
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $22,942 $122,806 $18,288 $127,562
NET INCOME . . . . . . . . . . . . . . . 25,242 18,650 49,894 36,880
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 17,197 5,251 34,394 25,436
Cumulative Preferred Stock . . . . . 3,057 2,765 5,823 5,531
Capital Stock Expense. . . . . . . . . 35 35 70 70
BALANCE AT END OF PERIOD . . . . . . . . $27,895 $133,405 $27,895 $133,405
The common stock of the Company is wholly owned by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,454,650 $1,443,506
Transmission . . . . . . . . . . . . . . . . . . . . 298,078 295,539
Distribution . . . . . . . . . . . . . . . . . . . . 776,281 755,342
General. . . . . . . . . . . . . . . . . . . . . . . 101,954 97,874
Construction Work in Progress. . . . . . . . . . . . 49,341 52,794
Total Electric Utility Plant . . . . . . . . 2,680,304 2,645,055
Accumulated Depreciation . . . . . . . . . . . . . . 847,539 811,817
NET ELECTRIC UTILITY PLANT . . . . . . . . . 1,832,765 1,833,238
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 32,379 34,558
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 9,169 6,633
Accounts Receivable. . . . . . . . . . . . . . . . . 52,222 52,088
Allowance for Uncollectible Accounts . . . . . . . . (1,310) (991)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 23,793 32,257
Materials and Supplies . . . . . . . . . . . . . . . 26,456 25,772
Accrued Utility Revenues . . . . . . . . . . . . . . 34,647 28,889
Prepayments. . . . . . . . . . . . . . . . . . . . . 36,647 28,372
Other. . . . . . . . . . . . . . . . . . . . . . . . 839 1,863
TOTAL CURRENT ASSETS . . . . . . . . . . . . 182,463 174,883
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 286,886 290,644
Other. . . . . . . . . . . . . . . . . . . . . . . . 231,506 249,348
TOTAL REGULATORY ASSETS. . . . . . . . . . . 518,392 539,992
TOTAL. . . . . . . . . . . . . . . . . . . $2,565,999 $2,582,671
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 24,000,000 Shares
Outstanding - 16,410,426 Shares. . . . . . . . . . $ 41,026 $ 41,026
Paid-in Capital. . . . . . . . . . . . . . . . . . . 565,642 566,046
Retained Earnings. . . . . . . . . . . . . . . . . . 27,895 18,288
Total Common Shareowner's Equity . . . . . . 634,563 625,360
Cumulative Preferred Stock - Subject to
Mandatory Redemption . . . . . . . . . . . . . . . 150,000 125,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 947,379 997,013
TOTAL CAPITALIZATION . . . . . . . . . . . . 1,731,942 1,747,373
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 24,564 17,189
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 50,000 20,700
Short-term Debt. . . . . . . . . . . . . . . . . . . 42,625 25,225
Accounts Payable . . . . . . . . . . . . . . . . . . 40,823 50,547
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 72,776 114,233
Interest Accrued . . . . . . . . . . . . . . . . . . 18,881 23,245
Other. . . . . . . . . . . . . . . . . . . . . . . . 33,108 22,189
TOTAL CURRENT LIABILITIES. . . . . . . . . . 258,213 256,139
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 476,648 474,290
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 66,686 68,533
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 7,946 19,147
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $2,565,999 $2,582,671
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 49,894 $ 36,880
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 41,125 44,559
Deferred Federal Income Taxes. . . . . . . . . . . . . . 6,115 10,864
Deferred Investment Tax Credits. . . . . . . . . . . . . (1,843) (1,883)
Deferred Fuel Costs (net). . . . . . . . . . . . . . . . (5,895) 4,783
Deferred Zimmer Plant Operating Expenses and
Carrying Charges . . . . . . . . . . . . . . . . . . . 5,698 (29,337)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 185 (1,180)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 7,780 (5,608)
Accrued Utility Revenues . . . . . . . . . . . . . . . . (5,758) (8,791)
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (8,275) (12,187)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (9,724) (3,874)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (41,457) (47,694)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 22,744 33,598
Net Cash Flows From Operating Activities . . . . . . 60,589 20,130
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (32,587) (39,577)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 24,596 -
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 198,298 98,586
Change in Short-term Debt (net). . . . . . . . . . . . . . 17,400 (3,494)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (225,835) (44,647)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (34,394) (25,436)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (5,531) (5,531)
Net Cash Flows From (Used For) Financing Activities. (25,466) 19,478
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 2,536 31
Cash and Cash Equivalents at Beginning of Period . . . . . . 6,633 8,322
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 9,169 $ 8,353
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $45,017,000 and $39,594,000
and for income taxes was $23,295,000 and $18,338,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $6,801,000 and $2,705,000 in 1994
and 1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial
statements should be read in conjunction with the 1993
Annual Report as incorporated in and filed with the Form 10-
K. Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. FINANCING ACTIVITIES
In June 1994, the Company issued 250,000 shares of 7%
cumulative preferred stock at $100 par value. The proceeds
are to be used to fund its construction program or to repay
short-term indebtedness incurred to fund its construction
program.
3. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Net income increased 35% in both the second quarter and
year-to-date periods reflecting increased energy sales due to
unseasonable weather.
Retail revenues increased $28.4 million or 14% for the
second quarter and $52.2 million or 13% for the year-to-date
period due to the weather and a rate increase. The Public
Utilities Commission of Ohio (PUCO) granted a 7.11% increase in
rates effective February 1, 1994 as a result of a November 1993
Ohio Supreme Court ruling that the PUCO did not have authority
under state law to order a rate phase-in for the Zimmer Plant.
The increase includes a 3.72% base rate increase, which
represents the acceleration of the final step of the court
rejected rate phase-in plan, and a 3.39% surcharge, which
provides for recovery of the $96.9 million of previous deferrals
under the phase-in plan and a return thereon, to be collected
over a period that is not expected to exceed four and one-half
years. The rate increase has no effect on net income since it is
offset by the amortization of prior year phase-in plan deferrals
and the cessation of current year deferrals which would have
occurred had the phase-in plan continued in effect.
Wholesale revenues increased $8.3 million or 63% for the
quarter and $20.1 million or 70% for the year-to-date period
primarily due to the Company's share of increased sales to
unaffiliated utilities by the AEP System Power Pool (Power Pool)
resulting from severe winter weather in the first quarter of
1994, unseasonably warm weather during the late spring and early
summer and forced outages at unaffiliated generating units.
<PAGE>
Other income statement lines which changed significantly
were as follows:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Fuel Expense. . . . . . . . $15.4 47.1 $18.9 22.8
Purchased Power Expense . . (9.4) (21.1) (3.6) (4.6)
Other Operation Expense . . 4.3 10.7 6.1 7.6
Amortization (Deferral) of
Zimmer Plant Phase-in
Costs . . . . . . . . . . 9.8 N.M. 16.8 N.M.
Federal Income Taxes. . . . 5.8 75.8 11.4 82.6
Deferred Zimmer Plant
Carrying Charges
(net of tax). . . . . . . (5.5) (82.9) (12.4) (77.7)
Interest Charges. . . . . . (1.8) (8.0) (2.0) (4.5)
N.M. = Not Meaningful
The significant increase in fuel expense was due to an
increase in net generation as three units returned to service
after being out for scheduled maintenance in the second quarter
of 1993 partially offset by the amortization of previously over
collected fuel costs through the operation of a fuel clause
adjustment mechanism. Under the fuel clause adjustment mechanism
the Company defers fuel expense to the extent it varies from the
allowed electric fuel component rate. Such cost variance
deferrals are amortized to fuel expense commensurate with their
inclusion in fuel rates.
The decrease in purchased power expense during the second
quarter resulted mainly from the increase in net generation.
Other operation expense increased reflecting the increased
generation and an increase in the provision for uncollectible
accounts due to higher write-offs of bad debts.
The amortization of Zimmer Plant phase-in costs increased
sharply due to a discontinuance of phase-in plan deferrals in
February 1994 and the subsequent amortization, commensurate with
the commencement of recovery of the previously deferred balance.
Federal income tax expense attributable to operations
increased substantially primarily due to the increase in pre-tax
operating income.
<PAGE>
Deferred Zimmer Plant carrying charges declined from the
prior year since the carrying charges in 1994 were accrued on the
unamortized phase-in plan deferral balance while the 1993
carrying charges were accrued on the larger Zimmer investment not
yet phased into rates.
Interest charges were reduced primarily due to the
refinancing of long-term debt at lower rates.
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $310,104 $278,100 $648,025 $581,068
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 46,885 52,535 99,943 111,012
Purchased Power. . . . . . . . . . . . 35,324 22,039 80,230 47,470
Other Operation. . . . . . . . . . . . 69,702 64,760 143,880 127,864
Maintenance. . . . . . . . . . . . . . 36,076 39,570 73,007 78,035
Depreciation and Amortization. . . . . 33,695 34,465 68,140 68,804
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . 3,911 3,911 7,822 7,822
Taxes Other Than Federal Income Taxes. 16,701 18,213 36,162 36,717
Federal Income Taxes . . . . . . . . . 13,178 1,885 25,394 9,353
TOTAL OPERATING EXPENSES . . . 255,472 237,378 534,578 487,077
OPERATING INCOME . . . . . . . . . . . . 54,632 40,722 113,447 93,991
NONOPERATING INCOME (LOSS) . . . . . . . 314 657 4,749 (2,347)
INCOME BEFORE INTEREST CHARGES . . . . . 54,946 41,379 118,196 91,644
INTEREST CHARGES . . . . . . . . . . . . 17,672 19,982 35,954 41,725
NET INCOME . . . . . . . . . . . . . . . 37,274 21,397 82,242 49,919
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 2,890 3,470 5,870 7,276
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 34,384 $ 17,927 $ 76,372 $ 42,643
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $192,929 $169,784 $177,638 $171,309
NET INCOME . . . . . . . . . . . . . . . 37,274 21,397 82,242 49,919
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 26,652 26,236 53,304 52,472
Cumulative Preferred Stock . . . . . 2,890 3,470 5,870 7,276
Capital Stock Expense. . . . . . . . . 50 15 95 20
BALANCE AT END OF PERIOD . . . . . . . . $200,611 $161,460 $200,611 $161,460
The common stock of the Company is wholly owned
by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,464,335 $2,602,527
Transmission . . . . . . . . . . . . . . . . . . . . 844,349 839,198
Distribution . . . . . . . . . . . . . . . . . . . . 620,304 608,752
General (including nuclear fuel) . . . . . . . . . . 179,640 152,470
Construction Work in Progress. . . . . . . . . . . . 97,613 88,010
Total Electric Utility Plant . . . . . . . . 4,206,241 4,290,957
Accumulated Depreciation and Amortization. . . . . . 1,617,738 1,714,829
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,588,503 2,576,128
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 461,687 432,459
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 7,935 3,752
Accounts Receivable. . . . . . . . . . . . . . . . . 130,200 121,840
Allowance for Uncollectible Accounts . . . . . . . . (633) (504)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 25,705 34,476
Materials and Supplies . . . . . . . . . . . . . . . 58,700 57,800
Accrued Utility Revenues . . . . . . . . . . . . . . 38,339 34,642
Prepayments. . . . . . . . . . . . . . . . . . . . . 12,000 12,043
TOTAL CURRENT ASSETS . . . . . . . . . . . . 272,246 264,049
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 297,570 286,948
Other. . . . . . . . . . . . . . . . . . . . . . . . 248,467 205,874
TOTAL REGULATORY ASSETS. . . . . . . . . . . 546,037 492,822
TOTAL. . . . . . . . . . . . . . . . . . . $3,868,473 $3,765,458
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 2,500,000 Shares
Outstanding - 1,400,000 Shares . . . . . . . . . . $ 56,584 $ 56,584
Paid-in Capital. . . . . . . . . . . . . . . . . . . 734,477 734,933
Retained Earnings. . . . . . . . . . . . . . . . . . 200,611 177,638
Total Common Shareowner's Equity . . . . . . 991,672 969,155
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 52,000 87,000
Subject to Mandatory Redemption. . . . . . . . . . 135,000 100,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,066,051 1,073,154
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,244,723 2,229,309
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 350,050 288,197
CURRENT LIABILITIES:
Short-term Debt - Commercial Paper . . . . . . . . . 76,150 50,075
Accounts Payable . . . . . . . . . . . . . . . . . . 46,489 57,918
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 46,525 54,473
Interest Accrued . . . . . . . . . . . . . . . . . . 17,954 18,894
Obligations Under Capital Leases . . . . . . . . . . 30,204 20,585
Other. . . . . . . . . . . . . . . . . . . . . . . . 80,174 79,367
TOTAL CURRENT LIABILITIES. . . . . . . . . . 297,496 281,312
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 566,026 553,920
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 177,615 186,032
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 207,792 211,446
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 24,771 15,242
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $3,868,473 $3,765,458
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 82,242 $ 49,919
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 73,938 73,368
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . . . . . . . . . . 7,822 7,822
Amortization (Deferral) of Incremental Nuclear
Refueling Outage Expenses (net). . . . . . . . . . . . (9,712) 17,921
Deferred Federal Income Taxes. . . . . . . . . . . . . . 1,484 (31,815)
Deferred Investment Tax Credits. . . . . . . . . . . . . (8,184) (4,159)
Deferred Property Taxes. . . . . . . . . . . . . . . . . (11,857) (10,960)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (8,231) 2,965
Fuel, Materials and Supplies . . . . . . . . . . . . . . 7,871 4,019
Accrued Utility Revenues . . . . . . . . . . . . . . . . (3,697) 49,842
Accounts Payable . . . . . . . . . . . . . . . . . . . . (11,429) (15,111)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (7,948) 47,686
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (13,582) 5,231
Net Cash Flows From Operating Activities . . . . . . 98,717 196,728
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (49,032) (48,394)
Proceeds from Sales of Property. . . . . . . . . . . . . . 993 -
Net Cash Flows Used For Investing Activities . . . . (48,039) (48,394)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 34,618 29,541
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 89,221 39,599
Change in Short-term Debt (net). . . . . . . . . . . . . . 26,075 (8,725)
Retirement of Cumulative Preferred Stock . . . . . . . . . (35,798) (40,896)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (101,833) (109,625)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (53,304) (52,472)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (5,474) (7,660)
Net Cash Flows Used For Financing Activities . . . . (46,495) (150,238)
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 4,183 (1,904)
Cash and Cash Equivalents at Beginning of Period . . . . . . 3,752 7,459
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 7,935 $ 5,555
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $35,936,000 and $43,885,000 and
for income taxes was $43,560,000 and $13,502,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $44,662,000 and $2,770,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. FINANCING ACTIVITIES
In June 1994, the Company issued $40 million of 7.63%
First Mortgage Bonds due in 2001.
3. VALUATION OF SECURITIES
On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities, (SFAS
115) which requires fair value accounting for investments in
equity securities with readily determinable market values
and investments in debt securities except those that the
reporting enterprise has the positive intent and ability to
hold to maturity. Debt securities not classified as held-
to-maturity, shall be classified as trading or available-
for-sale. Investments held in trust for decommissioning
nuclear facilities and for disposal of spent nuclear fuel
were classified as available-for-sale under SFAS 115. SFAS
115 requires that unrealized gains and losses on investments
classified as available-for-sale should be reported as a
separate component of shareholder's equity. However, due to
the rate-making process, SFAS 115 adjustments for unrealized
gains and losses to the carrying value of investments held
in the trusts will result in corresponding adjustments to
the nuclear decommissioning liability and the regulatory
asset for future recovery of spent nuclear fuel disposal
costs.
The cumulative effect of adopting SFAS 115 on January 1,
1994 resulted in an increase in the decommissioning and
spent nuclear fuel trust fund assets of $20.4 million
comprised of an unrealized holding gain of $21.4 million and
an unrealized holding loss of $1 million, with no effect on
net income and/or shareholder's equity. In accordance with
SFAS 115, prior year amounts were not restated.
The trust investments reported in other property and
investments had a fair value of $321 million at January 1,
1994 and consist primarily of long-term tax-exempt municipal
bonds. At January 1, 1994, the maturities of investments in
debt securities ranged from 1994 to 2024.
<PAGE>
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income increased $15.9 million or 74% for the quarter
and $32.3 million or 65% for the year-to-date period as a result
of increased retail sales due to unseasonable weather and growth
in the demand from industrial customers, a retail rate increase
and reduced interest expense from a refinancing program. In the
year-to-date period certain nonoperating federal income tax
adjustments contributed to the increased earnings.
Income statement items which changed significantly were:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues. . . . . $32.0 12 $ 67.0 12
Fuel Expense. . . . . . . . (5.7) (11) (11.1) (10)
Purchased Power Expense . . 13.3 60 32.8 69
Other Operation Expense . . 4.9 8 16.0 13
Maintenance Expense . . . . (3.5) (9) (5.0) (6)
Federal Income Taxes. . . . 11.3 599 16.0 172
Nonoperating Income (Loss). (0.3) (52) 7.1 N.M.
Interest Charges. . . . . . (2.3) (12) (5.8) (14)
N.M. = Not Meaningful
Operating revenues increased due to increased retail sales
reflecting colder winter weather, hot weather in the late spring
and early summer as well as increased industrial demand in 1994,
and a rate increase in the Indiana retail jurisdiction effective
November 1993 partly offset by reduced wholesale revenues.
Energy sales to both weather sensitive residential and commercial
customers increased 9% for the quarter and 7% for the year-to-
date period. Industrial energy sales rose 8% for the quarter and
year-to-date periods reflecting an increase in the number of
industrial customers as well as an increase in customer demand.
Wholesale sales declined for both periods as a result of outages
of both units of the Company's nuclear plant in 1994 which
reduced the amount of energy supplied to the AEP System Power
Pool (Power Pool) partially offset by increased sales to
directly-supplied unaffiliated wholesale customers and the
Company's share of increased sales made by the Power Pool.
In both periods the reduction in fuel expense reflects a
decrease in generation due to a scheduled refueling outage at one
of the nuclear units and an unscheduled maintenance outage at the
other unit. The refueling outage was from mid-February to the
end of May 1994 and the maintenance outage occurred from late-
February to late-April 1994.
Purchased power expense increased due to the acquisition of
additional power from the Power Pool in 1994 reflecting the
increased demand for energy and the decrease in generation;
increased energy purchases from unaffiliated utilities for pass-
through sales to other unaffiliated utilities; and additional
purchases from AEP Generating Company, an affiliate, which had
one unit out-of-service for maintenance in the second quarter of
1993.
The increase in other operation expense for both periods was
due to the accrual of additional nuclear decommissioning expense
and increased accruals for other postretirement benefits in the
Indiana jurisdiction commensurate with increased rate recovery.
Prior to recovery granted in the November 1993 rate order the
Indiana jurisdictional portion of accruals for other post-
retirement benefits were deferred. The increase in the year-to-
date period also included a provision for the disposal of
inventory and for employee severance benefits resulting from the
closing of Breed Plant.
Maintenance expense, exclusive of the maintenance performed
during the nuclear plant refueling outage which is deferred and
amortized over the period of approximately 18 months until the
start of the next refueling outage in accordance with rate-making
commission approval, decreased in both periods.
Federal income taxes attributable to operations increased
primarily due to increased pre-tax operating income during both
periods.
The increase in nonoperating income for the year-to-date
period reflects the favorable federal income tax effects of the
Breed Plant closing and the negative effect of adopting Statement
of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes, in January 1993 for nonutility assets and
liabilities.<PAGE>
Interest charges declined due to a refinancing program.
Subsequent to June 1993 the Company retired $83 million of long-
term debt, and refinanced at lower rates $200 million of long-
term debt and $97 million of installment purchase contracts.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first half of 1994 were $94.5 million. During the first
six months of 1994 short-term debt outstanding increased $26.1
million from year-end levels.
During February 1994 the Company redeemed $35 million of
7.76% Cumulative Preferred Stock and issued $35 million of 6.30%
Cumulative Preferred Stock. In March the Company retired $100
million of 8-3/4% First Mortgage Bonds and issued two $25 million
series of First Mortgage Bonds at 6.55% due in 2004 and 7.50% due
in 2024. In June the Company issued $40 million of 7.63% First
Mortgage Bonds due in 2001.
NUCLEAR DECOMMISSIONING
The Financial Accounting Standards Board (FASB), on June 15,
1994, added Accounting for Nuclear Decommissioning Liabilities to
its agenda. Among the topics to be studied is the question of
when future decommissioning liabilities should be recognized.
The Company and the electric utility industry accrue such costs
over the service life of its facilities. Should the FASB decide
to require that the liability for such costs be recorded in full,
it is expected that the Company will be able to record a related
asset. As a result it is not expected that the FASB project will
materially affect results of operations or financial position.
BREED PLANT RETIREMENT
In the first quarter of 1994 the 325-megawatt Breed Plant,
with an original cost of $153 million, was retired without
materially affecting results of operations or financial
condition. In accordance with the Federal Energy Regulatory
Commission Uniform System of Accounts the investment in the Breed
Plant was charged to the accumulated reserve for depreciation and
will increase future depreciation rates. The Breed Plant, which
began commercial operation in 1960, had been operated on a
restricted basis since 1992 when plans to close the plant were
announced.<PAGE>
NEW ACCOUNTING STANDARD
On January 1, 1994, the Company implemented SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities,
which required that the Company adopt fair value accounting for
nuclear decommissioning and spent nuclear fuel disposal trust
fund investments. SFAS 115 requires that unrealized gains and
losses on investments classified as available-for-sale should be
included as a separate component of shareholder's equity.
However, due to the rate-making process, adjustments to the fair
value of the investments held in the trusts resulted in
corresponding adjustments to the nuclear decommissioning
liability and the regulatory asset for future recovery of spent
nuclear fuel disposal costs. The cumulative effect of adopting
SFAS 115 resulted in recognizing an unrealized holding gain of
$21.4 million and an unrealized holding loss of $1 million with
no effect on net income.
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . $76,656 $60,160 $163,113 $140,335
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . 18,231 3,499 38,420 23,049
Purchased Power. . . . . . . . . . . . . 22,762 26,435 47,009 49,065
Other Operation. . . . . . . . . . . . . 9,830 10,240 18,841 19,132
Maintenance. . . . . . . . . . . . . . . 7,691 7,484 17,508 13,904
Depreciation and Amortization. . . . . . 5,738 5,531 11,453 11,052
Taxes Other Than Federal Income Taxes. . 1,863 1,416 4,268 4,098
Federal Income Tax Expense (Credit). . . 534 (1,311) 2,627 509
TOTAL OPERATING EXPENSES. . . . . 66,649 53,294 140,126 120,809
OPERATING INCOME . . . . . . . . . . . . . 10,007 6,866 22,987 19,526
NONOPERATING LOSS. . . . . . . . . . . . . (90) (64) (125) (116)
INCOME BEFORE INTEREST CHARGES . . . . . . 9,917 6,802 22,862 19,410
INTEREST CHARGES . . . . . . . . . . . . . 5,132 4,978 10,274 10,325
NET INCOME . . . . . . . . . . . . . . . . $ 4,785 $ 1,824 $ 12,588 $ 9,085
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . . $87,750 $91,739 $85,296 $89,957
NET INCOME . . . . . . . . . . . . . . . . 4,785 1,824 12,588 9,085
CASH DIVIDENDS DECLARED. . . . . . . . . . 5,349 5,478 10,698 10,957
BALANCE AT END OF PERIOD . . . . . . . . . $87,186 $88,085 $87,186 $88,085
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $212,127 $211,617
Transmission . . . . . . . . . . . . . . . . . . . . 252,239 249,966
Distribution . . . . . . . . . . . . . . . . . . . . 282,987 281,834
General. . . . . . . . . . . . . . . . . . . . . . . 56,130 54,637
Construction Work in Progress. . . . . . . . . . . . 24,530 9,374
Total Electric Utility Plant . . . . . . . . 828,013 807,428
Accumulated Depreciation and Amortization. . . . . . 257,363 248,673
NET ELECTRIC UTILITY PLANT . . . . . . . . . 570,650 558,755
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 5,940 6,763
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 746 858
Accounts Receivable. . . . . . . . . . . . . . . . . 24,308 24,346
Allowance for Uncollectible Accounts . . . . . . . . (302) (208)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 8,692 8,405
Materials and Supplies . . . . . . . . . . . . . . . 9,002 8,804
Accrued Utility Revenues . . . . . . . . . . . . . . 5,475 10,476
Prepayments. . . . . . . . . . . . . . . . . . . . . 2,420 1,367
TOTAL CURRENT ASSETS . . . . . . . . . . . . 50,341 54,048
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 41,274 37,910
Other. . . . . . . . . . . . . . . . . . . . . . . . 12,321 12,903
TOTAL REGULATORY ASSETS. . . . . . . . . . . 53,595 50,813
TOTAL. . . . . . . . . . . . . . . . . . . $680,526 $670,379
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - $50 Par Value:
Authorized - 2,000,000 Shares
Outstanding - 1,009,000 Shares . . . . . . . . . . $ 50,450 $ 50,450
Paid-in Capital. . . . . . . . . . . . . . . . . . . 58,750 58,750
Retained Earnings. . . . . . . . . . . . . . . . . . 87,186 85,296
Total Common Shareowner's Equity . . . . . . 196,386 194,496
Long-term Debt . . . . . . . . . . . . . . . . . . . 253,539 253,495
TOTAL CAPITALIZATION . . . . . . . . . . . . 449,925 447,991
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 11,974 7,678
CURRENT LIABILITIES:
Short-term Debt. . . . . . . . . . . . . . . . . . . 36,175 38,150
Accounts Payable . . . . . . . . . . . . . . . . . . 20,681 18,456
Customer Deposits. . . . . . . . . . . . . . . . . . 4,445 4,621
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 7,508 6,767
Interest Accrued . . . . . . . . . . . . . . . . . . 5,775 5,905
Other. . . . . . . . . . . . . . . . . . . . . . . . 10,917 8,186
TOTAL CURRENT LIABILITIES. . . . . . . . . . 85,501 82,085
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 111,591 108,966
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 15,963 16,454
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 5,572 7,205
CONTINGENCIES (Note 2)
TOTAL. . . . . . . . . . . . . . . . . . . $680,526 $670,379
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 12,588 $ 9,085
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 11,474 11,094
Deferred Federal Income Taxes. . . . . . . . . . . . . . (739) (858)
Deferred Investment Tax Credits. . . . . . . . . . . . . (634) (641)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 132 4,842
Fuel, Materials and Supplies . . . . . . . . . . . . . . (485) (3,441)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 5,001 1,506
Accounts Payable . . . . . . . . . . . . . . . . . . . . 2,225 1,377
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 741 (4,200)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 3,077 (2,024)
Net Cash Flows From Operating Activities . . . . . . 33,380 16,740
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (21,682) (18,281)
Proceeds from Sales of Property. . . . . . . . . . . . . . 863 904
Net Cash Flows Used For Investing Activities . . . . (20,819) (17,377)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 84,115
Change in Short-term Debt (net). . . . . . . . . . . . . . (1,975) 13,050
Retirement of Long-term Debt . . . . . . . . . . . . . . . - (85,886)
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (10,698) (10,957)
Net Cash Flows From (Used For) Financing Activities. (12,673) 322
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (112) (315)
Cash and Cash Equivalents at Beginning of Period . . . . . . 858 1,070
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 746 $ 755
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $10,293,000 and $10,684,000
and for income taxes was $3,015,000 and $6,235,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $2,612,000 and $844,000 in 1994 and
1993, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should
be read in conjunction with the 1993 Annual Report as
incorporated in and filed with the Form 10-K.
2. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Net income increased 162% to $4.8 million in the quarter and
39% to $12.6 million in the year-to-date period primarily
reflecting increased energy sales due to unseasonable weather.
The favorable impact on year-to-date net income of unseasonable
weather was partially offset by storm damage expenses.
Income statement items which changed significantly were as
follows:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues . . . . . $16.5 27 $22.8 16
Fuel Expense . . . . . . . . 14.7 421 15.4 67
Purchased Power Expense. . . (3.7) (14) (2.1) (4)
Maintenance Expense. . . . . 0.2 3 3.6 26
Federal Income Taxes . . . . 1.8 N.M. 2.1 416
N.M. - Not Meaningful
Operating revenues increased significantly reflecting
increased wholesale energy sales to the AEP System Power Pool
(Power Pool), resulting from the increased availability of the
Big Sandy Plant Unit 2 in 1994 and an increase in sales to retail
and unaffiliated wholesale customers due to the unseasonable
weather and for wholesale sales, forced generating unit outages.
Big Sandy Unit 2 was out of service the entire second quarter of
1993 for scheduled maintenance and boiler repair. Its avail-
ability in 1994 enabled the Company to make energy sales to the
Power Pool. Retail energy sales increased 4% in both the quarter
and year-to-date periods as sales to weather sensitive
residential and commercial customers increased due to the severe
weather in the winter of 1994 and in June of 1994. The weather-
related demand for energy and forced outages at unaffiliated
generating units caused an increase in sales to unaffiliated
wholesale customers.
<PAGE>
The substantial increase in fuel expense in both periods is
attributable to increased generation reflecting the increased
availability of Big Sandy Unit 2 and the weather related increase
in demand for energy. The decrease in purchased power expense in
the second quarter resulted from the increased availability of
Big Sandy Unit 2. Storm damage to distribution lines caused by
severe winter storms in January and February 1994 increased year-
to-date maintenance expense. The substantial increase in federal
income taxes in both periods was primarily due to an increase in
pre-tax operating income.
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $417,352 $410,923 $904,393 $841,081
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 159,960 158,933 360,589 321,034
Purchased Power. . . . . . . . . . . . 17,648 12,757 38,158 27,982
Other Operation. . . . . . . . . . . . 52,803 51,291 102,706 104,658
Maintenance. . . . . . . . . . . . . . 36,935 35,338 73,080 70,577
Depreciation and Amortization. . . . . 32,852 32,059 65,582 64,007
Taxes Other Than Federal Income Taxes. 44,399 41,536 88,891 85,193
Federal Income Taxes . . . . . . . . . 17,000 16,110 44,772 35,766
TOTAL OPERATING EXPENSES . . . 361,597 348,024 773,778 709,217
OPERATING INCOME . . . . . . . . . . . . 55,755 62,899 130,615 131,864
NONOPERATING INCOME. . . . . . . . . . . 555 2,647 2,196 10,908
INCOME BEFORE INTEREST CHARGES . . . . . 56,310 65,546 132,811 142,772
INTEREST CHARGES . . . . . . . . . . . . 22,334 26,047 44,600 53,986
NET INCOME . . . . . . . . . . . . . . . 33,976 39,499 88,211 88,786
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,825 4,319 7,650 8,598
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 30,151 $ 35,180 $ 80,561 $ 80,188
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $490,259 $457,141 $474,500 $445,955
NET INCOME . . . . . . . . . . . . . . . 33,976 39,499 88,211 88,786
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 34,617 33,823 69,234 67,645
Cumulative Preferred Stock . . . . . 3,825 4,324 7,650 8,603
Capital Stock Expense. . . . . . . . . 34 6 68 6
BALANCE AT END OF PERIOD . . . . . . . . $485,759 $458,487 $485,759 $458,487
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,458,181 $2,412,973
Transmission . . . . . . . . . . . . . . . . . . . . 787,991 767,548
Distribution . . . . . . . . . . . . . . . . . . . . 778,545 766,639
General (including mining assets). . . . . . . . . . 779,391 754,347
Construction Work in Progress. . . . . . . . . . . . 70,591 100,820
Total Electric Utility Plant . . . . . . . . 4,874,699 4,802,327
Accumulated Depreciation and Amortization. . . . . . 2,031,275 1,992,082
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,843,424 2,810,245
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 119,337 138,224
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 11,145 20,803
Accounts Receivable. . . . . . . . . . . . . . . . . 175,072 180,135
Allowance for Uncollectible Accounts . . . . . . . . (1,231) (960)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 155,191 179,554
Materials and Supplies . . . . . . . . . . . . . . . 63,460 66,791
Accrued Utility Revenues . . . . . . . . . . . . . . 26,383 32,234
Prepayments. . . . . . . . . . . . . . . . . . . . . 58,975 43,907
TOTAL CURRENT ASSETS . . . . . . . . . . . . 488,995 522,464
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 423,887 433,822
Other. . . . . . . . . . . . . . . . . . . . . . . . 227,371 211,550
TOTAL REGULATORY ASSETS. . . . . . . . . . . 651,258 645,372
TOTAL. . . . . . . . . . . . . . . . . . . $4,103,014 $4,116,305
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 40,000,000 Shares
Outstanding - 27,952,473 Shares. . . . . . . . . . $ 321,201 $ 321,201
Paid-in Capital. . . . . . . . . . . . . . . . . . . 463,100 463,100
Retained Earnings. . . . . . . . . . . . . . . . . . 485,759 474,500
Total Common Shareowner's Equity . . . . . . 1,270,060 1,258,801
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 126,240 126,240
Subject to Mandatory Redemption. . . . . . . . . . 115,000 115,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,187,908 1,189,086
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,699,208 2,689,127
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 123,975 104,172
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 567 5,397
Short-term Debt. . . . . . . . . . . . . . . . . . . 23,503 40,250
Accounts Payable . . . . . . . . . . . . . . . . . . 115,296 140,089
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 147,164 168,095
Interest Accrued . . . . . . . . . . . . . . . . . . 22,459 20,862
Obligations Under Capital Leases . . . . . . . . . . 25,711 21,916
Other. . . . . . . . . . . . . . . . . . . . . . . . 118,818 107,592
TOTAL CURRENT LIABILITIES. . . . . . . . . . 453,518 504,201
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 694,773 725,283
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 44,353 45,795
REGULATORY LIABILITIES AND DEFERRED CREDITS. . . . . . 87,187 47,727
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $4,103,014 $4,116,305
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 88,211 $ 88,786
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . . . . . 72,693 72,609
Deferred Federal Income Taxes. . . . . . . . . . . . . . (20,633) (19,479)
Deferred Investment Tax Credits. . . . . . . . . . . . . (1,773) (1,996)
Deferred Fuel Costs (net). . . . . . . . . . . . . . . . 4,189 (845)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 5,334 4,923
Fuel, Materials and Supplies . . . . . . . . . . . . . . 27,694 8,122
Accrued Utility Revenues . . . . . . . . . . . . . . . . 5,851 6,426
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (15,068) (17,354)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (24,793) 7,981
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (20,931) (25,016)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 14,054 37,065
Net Cash Flows From Operating Activities . . . . . . 134,828 161,222
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (80,601) (57,385)
Proceeds from Sale of Property and Other . . . . . . . . . 35,920 231
Net Cash Flows Used For Investing Activities . . . . (44,681) (57,154)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . - 29,554
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 48,251 217,213
Change in Short-term Debt (net). . . . . . . . . . . . . . (16,747) 70,700
Retirement of Cumulative Preferred Stock . . . . . . . . . - (22,233)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (54,425) (373,400)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (69,234) (67,645)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (7,650) (8,603)
Net Cash Flows Used For Financing Activities . . . . (99,805) (154,414)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (9,658) (50,346)
Cash and Cash Equivalents at Beginning of Period . . . . . . 20,803 71,056
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 11,145 $ 20,710
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $41,687,000 and $54,993,000 and
for income taxes was $46,274,000 and $39,125,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $27,189,000 and $7,503,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
2. RATE MATTERS
Rate Request
On July 6, 1994 an application to increase base retail
rates was filed with the Public Utilities Commission of Ohio
(PUCO) seeking a $152.5 million or 13.8% increase in annual
revenues. More than half of the increase reflects recovery
of costs associated with Gavin Plant's flue gas
desulfurization system and other costs associated with
meeting environmental restrictions imposed by the Clean Air
Act Amendments of 1990 (CAAA). The remainder of the request
seeks to recover increased service costs since the last base
rate increase in July 1986; an increase in depreciation
rates which includes recovery on a remaining life basis of
the cost of plant and equipment and the cost of removal of
plant and equipment; and recovery of costs associated with
pressurized fluidized bed combustion research and develop-
ment as well as energy conservation demand-side management
programs.
Recovery of Fuel Costs
In May 1994 the PUCO issued an order related to fuel
costs included in the electric fuel component (EFC) rate for
retail customers for the period beginning December 1, 1992
through November 30, 1993. As part of the EFC review, the
PUCO ruled that a 1993 dragline lease buyout by a
subsidiary, Central Ohio Coal Company (COCCo), was a proper
coal expense to be passed through the EFC. However, the
PUCO denied recovery of the buyout as a component of
affiliated coal cost during the fuel period under review.
The PUCO ruled that the cost should have been included in
fuel costs in 1991 when the dragline was idled. However,
the cost would not have been recovered since the Company's
fuel costs in 1991 were already in excess of a PUCO ordered
price cap. As a result a fuel cost disallowance was
recorded in June 1994 resulting in an adverse impact on net
income of $4.3 million net of taxes.
The PUCO also reviewed the 1992 sale of the affiliated
Martinka mining operation and a 20-year coal supply contract
with an affiliate of the buyer. Although the PUCO auditor
found that the sale of the Martinka mine was reasonable, the
PUCO stated that its responsibility is not to approve such
transactions but to determine if fuel acquisition and
delivery costs are fair and reasonable during the audit
period. The PUCO found that the cost of the coal contract
was reasonable during the fuel period under review.
The PUCO strongly recommended that another subsidiary,
Windsor Coal Company, not supply coal to the Company's
Cardinal Unit 1 after the January 1995 commencement of Phase
I of the CAAA. AEP's systemwide PUCO approved CAAA Phase I
compliance plan includes continued use of Windsor coal at
Cardinal Unit 1 until the commencement of Phase II of the
CAAA in January 2000. The PUCO also recommended that the
Company commence negotiations with customers regarding the
recovery of its investment in the affiliated Windsor and
COCCo mines. Unless the cost of affiliated mine closures
can be recovered from customers, results of operations and
financial condition would be adversely affected.
3. CONTINGENCIES
Meigs Mine Litigation
In April 1994 the U.S. Court of Appeals for the Sixth
Circuit reversed the judgement of the U.S. District Court
for the Southern District of Ohio which had granted a
preliminary injunction to Southern Ohio Coal Company
(SOCCo), a mining subsidiary, preventing the United States
Environmental Protection Agency (Federal EPA) and the
Federal Office of Surface Mining, Reclamation and
Enforcement from interfering with the removal of water from
SOCCo's Meigs 31 mine. SOCCo sought and received a stay of
the Court of Appeals' mandate and on July 15, 1994 filed a
petition with the U.S. Supreme Court for a writ of
certiorari seeking a review of the Court of Appeals Order.
As a result of the West Virginia Division of
Environmental Protection proposing to fine SOCCo for alleged
violations from the release of mine water into the Ohio
River, SOCCo filed an action on June 1, 1994 in the U.S.
District Court for the Southern District of West Virginia
seeking a determination that the state of West Virginia has
no jurisdiction to impose penalties with respect to the
Meigs mine water discharges. On July 27, 1994 West Virginia
filed an answer to SOCCo's complaint disputing SOCCo's
entitlement to a declaratory judgement and asserting a
counterclaim seeking an award of $2.55 million in civil
penalties, reimbursement of monitoring costs and compen-
sation for unspecified natural resources damage.
The resolution of these legal actions is not expected to
have a material adverse impact on results of operations or
financial condition. Note 3 in the 1993 Annual Report
discusses the Meigs mine litigation in detail.
Kammer Plant
On August 4, 1994, the Federal EPA issued a Notice of
Violation (NOV) to the Company alleging that the Kammer
Plant has been operating in violation of applicable
federally enforceable air pollution control requirements
since January 1, 1989. The Clean Air Act provides that
Federal EPA may, after the expiration of 30 days following
the issuance of the NOV, commence a civil action for
injunctive relief and/or civil penalties of up to $25,000
per day for each day of violation. The Company is entering
into discussions with Federal EPA in an effort to resolve
the issue of the appropriate sulfur dioxide emission limits
for the Kammer Plant. At this time management is unable to
determine the ultimate impact of this matter on results of
operations and financial condition.
Proposed Changes in Regulation
The Public Utility Holding Company Act of 1935 (1935
Act) is being reviewed by the Securities and Exchange
Commission (SEC) and Congress for possible revision.
Amendments being considered could alter the policy for
pricing affiliated transactions under the 1935 Act and
result in the application of a lower of cost or market test
to determine the allowed price for affiliated company
transactions. Included in provisions being considered in
the legislation is a grandfathering feature that would
exempt contracts between affiliates entered into before the
passage of the legislation. Unless the Company's affiliated
coal mining contracts are exempted, passage of such
legislation or revisions of the SEC regulations under the
1935 Act could negatively impact the Company's ability to
recover its cost of affiliated coal mining operations. The
inability to recover such costs including any shutdown costs
would adversely affect results of operations and possibly
financial condition.
Other
The Company continues to be involved in certain other
matters discussed in the 1993 Annual Report.
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND QUARTER 1994 vs. SECOND QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Although demand for energy increased due to unseasonable
weather, net income decreased $5.5 million or 14% in the quarter
and was essentially unchanged in the year-to-date period. The
decrease in second quarter comparative net income was mainly due
to the unfavorable effect of a fuel cost disallowance recorded in
June 1994, an increase in West Virginia business and occupation
taxes on generation and a reduction in nonoperating income. In
the year-to-date period the favorable effect of the severe winter
weather and the hot weather in the late spring and early summer
was offset by the fuel cost disallowance related to the idling of
the Big Muskie Dragline at the Company's affiliated Central Ohio
Coal Company (COCCo) (see "Recovery Of Fuel Costs" below), the
lack of full recovery of the cost of idling another COCCo
dragline under major industrial contracts which do not provide
for the direct recovery of such costs and an increase in federal
income tax expense not related to the increased revenues.
Income statement lines which changed significantly were:
Increase (Decrease)
Second Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues . . . . $ 6.4 2 $63.3 8
Fuel Expense . . . . . . . 1.0 1 39.6 12
Purchased Power Expense. . 4.9 38 10.2 36
Taxes Other Than Federal
Income Taxes . . . . . . 2.9 7 3.7 4
Federal Income Taxes . . . 0.9 6 9.0 25
Nonoperating Income. . . . (2.1) (79) (8.7) (80)
Interest Charges . . . . . (3.7) (14) (9.4) (17)
The significant increase in operating revenues in the year-
to-date period was primarily due to increased energy demand as a
result of unseasonably cold winter weather and unseasonably hot
weather in June 1994. Residential energy sales increased 7% in
the year-to-date period while sales to commercial and industrial
customers increased 5% and 2%, respectively. Wholesale energy
sales increased 2% as sales to unaffiliated utilities, including
the Company's share of sales to non-affiliates made by the Power
Pool, increased as a result of the unseasonable weather and
forced outages at unaffiliated generating units.
Year-to-date fuel expenses increased primarily due to the
increase in weather-related retail energy demand, the fuel cost
disallowance, the abandonment of the COCCo dragline and a higher
average cost of fuel consumed. Increased energy purchases from
unaffiliated utilities for pass-through sales to other
unaffiliated utilities resulted in the significant increase in
purchased power expense reflecting the impact of severe winter
weather on demand for wholesale energy in the first quarter of
1994 and outages at unaffiliated generating units.
The increase in taxes other than federal income tax expense
was due to increased West Virginia business and occupation taxes
on generation reflecting the increase in generation at West
Virginia power plants and an increase in Ohio real and personal
property taxes due to an increase in valuation and tax rates.
The increase in federal income tax expense in both periods
was due to changes in certain book/tax differences which are
accounted for on a flow-through basis for rate-making purposes
and the increase in the corporate tax rate effective in August
1993. Under Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109), deferred taxes associated
with book/tax differences flowed-through to affect cost of
service for rate-making purposes are recorded on the balance
sheet with a corresponding regulatory asset or liability however,
the current effect of such items is reflected in the income
statement. The increase in pre-tax operating income also
contributed to the year-to-date increase.
Nonoperating income decreased in the quarter primarily due
to a loss recorded in 1994 for the termination of a capital lease
on surplus mining equipment and interest income recorded in 1993
on a court ordered reversal of a prior refund in the Company's
Federal Energy Regulatory Commission jurisdiction. In the year-
to-date period nonoperating income also declined as a result of
the favorable effects of adopting SFAS 109 in January 1993 and
interest income recorded in March of 1993 on tax refunds received
from the Internal Revenue Service in connection with the
settlement of audits of prior years' tax returns. Interest
expense decreased primarily as a result of the refinancing of
debt at lower interest rates.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first six months of 1994 were $109 million.
In January 1994 a coal mining subsidiary, Southern Ohio Coal
Company (SOCCo), entered into three loan agreements due January
2001 totaling $30 million with 6.20% fixed interest rates and one
$15 million variable interest rate term loan agreement due in
January 1999 with a 3.725% initial rate through July 1994. The
proceeds of the loan were used in January 1994 to pay at maturity
two fixed interest rate term loans of $20 million at 8% and $25
million at 8.01%. Also during January 1994 another mining
subsidiary, Windsor Coal Company, retired at maturity a $5
million term loan with an interest rate of 8%.
RECOVERY OF FUEL COSTS
In May 1994 the Public Utilities Commission of Ohio (PUCO)
issued an order related to fuel costs included in the electric
fuel component (EFC) rate for retail customers for the period
beginning December 1, 1992 through November 30, 1993. As part of
the EFC review, the PUCO ruled that a 1993 dragline lease buyout
by COCCo, was a proper coal expense to be passed through the EFC.
However, the PUCO denied recovery of the buyout as a component of
affiliated coal cost during the fuel period under review. The
PUCO ruled that the cost should have been included in fuel costs
in 1991 when the dragline was idled. However, the cost would not
have been recovered since the Company's fuel costs in 1991 were
already in excess of a PUCO ordered price cap. As a result a
fuel cost disallowance was recorded in June 1994 resulting in an
adverse impact on net income of $4.3 million net of taxes.
In June 1994 COCCo idled another leased dragline and shovel
and bought out the lease. Management concluded that this mining
equipment would no longer be needed due to the Muskingum River
Plant's Clean Air Act Amendments of 1990 (CAAA) compliance plan
to use low sulfur coal from unaffiliated sources. The idling of
this equipment and related lease buyout are not expected to have
a material effect on future results of operations.
The PUCO also reviewed the 1992 sale of the affiliated
Martinka mining operation and 20-year coal supply contract with
an affiliate of the buyer. Although the PUCO auditor found that
the sale of the Martinka mine was reasonable, the PUCO stated
that its responsibility is not to approve such transactions but
to determine if fuel acquisition and delivery costs are fair and
reasonable during the audit period. The PUCO found that the cost
of the coal contract was reasonable during the fuel period under
review.
The PUCO strongly recommended that another subsidiary,
Windsor Coal Company, not supply coal to the Company's Cardinal
Unit 1 after the January 1995 commencement of Phase I of the
CAAA. AEP's systemwide PUCO approved CAAA Phase I compliance
plan includes continued use of Windsor coal at Cardinal Unit 1
until the commencement of Phase II of the CAAA in January 2000.
The PUCO also recommended that the Company commence negotiations
with customers regarding the recovery of its investment in the
affiliated Windsor and COCCo mines. Unless the cost of
affiliated mine closures can be recovered from customers, results
of operations and financial condition would be adversely
affected.
RATE ACTIVITY
On July 6, 1994, the Company filed with the PUCO for an
annual revenue increase of $152.5 million. More than half of the
requested retail base rate increase is to recover costs
associated with Gavin Plant's flue gas desulfurization system
(scrubbers) and other costs resulting from complying with CAAA.
The remainder of the increase is to recover the additional cost
of providing service to customers since the last base rate
increase in July 1986; increased depreciation rates for
investment in plant and equipment based on a remaining life
method and recovery of removal costs; and recovery of costs
associated with pressurized fluidized bed combustion research and
development and energy conservation demand-side management
programs.
NOTICE OF VIOLATION - KAMMER PLANT
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to the Company alleging that the Kammer Plant has been
operating in violation of applicable federally enforceable air
pollution control requirements since January 1, 1989. By law the
Federal EPA may seek penalties of up to $25,000 per day for each
day of violation. The Company is entering into discussions with
Federal EPA in an effort to resolve the issue of the appropriate
sulfur dioxide emission limits for the Kammer Plant. At this
time management is unable to determine the ultimate impact of
this matter on results of operations and financial condition.
MEIGS MINE LITIGATION
On July 15, 1994, SOCCo filed a petition seeking review by
the U.S. Supreme Court of an Order of the U.S. Court of Appeals
for the Sixth Circuit which held that the injunction granted to
SOCCo by the U.S. District Court for the Southern District of
Ohio was not supported by law. The District Court had granted a
preliminary injunction to SOCCo preventing the Federal EPA and
the Federal Office of Surface Mining, Reclamation and Enforcement
from interfering with the removal of water from SOCCo's Meigs 31
mine.
On June 1, 1994, SOCCo filed an action in the U.S. District
Court for the Southern District of West Virginia seeking a
determination that the state of West Virginia has no jurisdiction
to impose penalties upon SOCCo as a result of the Meigs mine
water discharges. On July 27, 1994 West Virginia filed an answer
to SOCCo's complaint disputing SOCCo's entitlement to a
declaratory judgement and asserting a counterclaim seeking an
award of $2.55 million in civil penalties, reimbursement of
monitoring costs and compensation for unspecified natural
resources damage.
The resolution of this Meigs mine litigation is not expected
to have a material adverse impact on results of operations or
financial condition. Note 3 in the 1993 Annual Report discusses
this litigation in detail.
PROPOSED CHANGES IN REGULATION
Congress is considering amendments to the Public Utility
Holding Company Act of 1935 (1935 Act) and the Securities and
Exchange Commission is considering amending its rules promulgated
under the 1935 Act. These amendments could alter the policy for
pricing affiliated transactions under the 1935 Act and result in
the application of a lower of cost or market test to determine
the allowed price for affiliated company transactions.
Provisions in the legislation being considered may create a
grandfathering feature that would exempt contracts between
affiliates entered into before the passage of the legislation.
The adoption of any new policy regarding pricing of affiliated
transactions could affect the Company's ability to recover the
costs of its affiliated mining operations.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Columbus Southern Power Company ("CSPCo")
Reference is made to page 42 of the Annual Report on Form
10-K for the year ended December 31, 1993 ("1993 10-K") for a
discussion of a complaint issued by Region V, U.S. Environmental
Protection Agency ("Federal EPA") which alleged violations by
Conesville Plant of the Toxic Substances Control Act and proposed
a penalty of $41,000. In June 1994, CSPCo paid a mitigated
penalty of $12,750 to settle this action.
Ohio Power Company ("OPCo")
Reference is made to page 42 of the 1993 10-K for a discus-
sion of a complaint issued by Region V, Federal EPA which alleged
violations by OPCo's General Service Center (Canton, Ohio) of the
Toxic Substances Control Act and proposed a penalty of $24,000.
In July 1994, OPCo paid a mitigated penalty of $6,200 to settle
this action.
Item 4. Submission of Matters to a Vote of Security Holders.
American Electric Power Company, Inc. ("AEP")
The annual meeting of shareholders was held in Columbus,
Ohio on April 27, 1994. The holders of shares entitled to vote
at the meeting or their proxies cast votes at the meeting with
respect to the following four matters, as indicated below:
1. Election of 12 directors to hold office until the next
annual meeting and until their successors are duly
elected. Each nominee for director was elected by a
vote of the shareowners as follows:
Number of Shares Number of Votes
Nominee Voted For Withheld
Peter J. DeMaria 136,172,389 2,117,722
A. Joseph Dowd 136,152,216 2,137,895
E. Linn Draper, Jr. 136,060,894 2,229,217
Robert M. Duncan 136,055,381 2,234,730
Arthur G. Hansen 135,890,055 2,400,056
Lester A. Hudson, Jr. 136,149,807 2,140,304
Gerald P. Maloney 136,171,605 2,118,506
Angus E. Peyton 136,100,126 2,189,985
Toy F. Reid 135,997,975 2,292,136
Linda Gillespie Stuntz 135,879,672 2,410,439
Morris Tanenbaum 135,988,660 2,301,451
Ann Haymond Zwinger 135,995,388 2,294,723
2. Approve the appointment by the Board of Directors of
Deloitte & Touche as independent auditors of AEP for the
year 1994. The proposal was approved by a vote of the
shareowners as follows:
Votes FOR 136,373,946
Votes AGAINST 853,781
Votes ABSTAINED 1,062,384
Broker NON-VOTES* 0
3. Approve the sale of new Common Stock for the Dividend
Reinvestment and Stock Purchase Plan. The proposal was
approved by a vote of the shareowners as follows:
Votes FOR 110,039,842
Votes AGAINST 3,914,318
Votes ABSTAINED 2,050,373
Broker NON-VOTES* 22,285,578
4. Approve the AEP Performance Share Incentive Plan. The
proposal was approved by a vote of the shareowners as
follows:
Votes FOR 123,924,689
Votes AGAINST 11,059,287
Votes ABSTAINED 3,306,135
Broker NON-VOTES* 0
*A non-vote occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not
vote on another proposal because the nominee does not
have discretionary voting power and has not received
instructions from the beneficial owner.
Appalachian Power Company ("APCo")
The annual meeting of stockholders was held on April 26,
1994 at 1 Riverside Plaza, Columbus, Ohio. At the meeting,
13,499,500 votes were cast FOR each of the following eight
persons for election as directors and there were no votes with-
held and such persons were elected directors to hold office for
one year or until their successors are elected and qualify:
Peter J. DeMaria William J. Lhota
A. Joseph Dowd G. P. Maloney
E. Linn Draper, Jr. James J. Markowsky
Luke M. Feck Joseph H. Vipperman
No other business was transacted at the meeting.
Indiana Michigan Power Company ("I&M")
The annual meeting of stockholders was held on April 26,
1994 at the principal office of I&M in Fort Wayne, Indiana. At
the meeting, 1,400,000 votes were cast FOR each of the following
eleven persons for election as directors and there were no votes
withheld and such persons were elected directors to hold office
for one year or until their successors are elected and qualify:
Mark A. Bailey Gerald P. Maloney
Peter J. DeMaria Richard C. Menge
W. N. D'Onofrio Albert H. Potter
A. Joseph Dowd D. M. Trenary
E. Linn Draper, Jr. W. E. Walters
William J. Lhota
No other business was transacted at the meeting.
OPCo
The annual meeting of shareholders was held on May 3, 1994
at the principal office of OPCo in Canton, Ohio. At the meeting,
27,952,473 votes were cast FOR each of the following eight
persons for election as directors and there were no votes with-
held and such persons were elected directors to hold office for
one year or until their successors are elected and qualify:
Peter J. DeMaria Henry W. Fayne
A. Joseph Dowd William J. Lhota
E. Linn Draper, Jr. G. P. Maloney
Carl A. Erikson James J. Markowsky
In addition, 27,952,473 votes were cast FOR an amendment to
OPCo's Amended Articles of Incorporation to reclassify 1,050,000
authorized but unissued shares of OPCo's Cumulative Preferred
Stock, par value $100 per share, to 1,050,000 authorized but
unissued shares of OPCo's Cumulative Preferred Stock, Non-Voting
par value $100 per share, and there were no votes against this
proposal and no broker non-votes.
No other business was transacted at the meeting.
Item 5. Other Information.
AEP, AEP Generating Company ("AEGCo"), APCo, CSPCo, I&M, Kentucky
Power Company ("KEPCo") and OPCo
Reference is made to pages 3, 7 and 8 of the 1993 10-K for a
discussion of regulation and competition in the electric utility
industry. Pursuant to a Federal Register notice of July 7, 1994,
the Securities and Exchange Commission ("SEC") conducted a round-
table discussion on July 18 and 19, 1994 with representatives of
various industry and regulatory groups to inaugurate a comprehen-
sive study of the Public Utility Holding Company Act of 1935
("PUHCA"). The SEC has undertaken this study in response to
changes in the utility industry, particularly the Energy Policy
Act of 1992. This process is intended to culminate in recommen-
dations to Congress for amendments to PUHCA. The SEC included
the following topics in its agenda: the need for continued
integration of a registered holding company system, limits on the
ability to diversify, the criteria for exemption from registra-
tion under PUHCA, and the question of foreign ownership of U.S.
utilities.
On June 29, 1994, the Federal Energy Regulatory Commission
("FERC") issued a proposed rulemaking to provide the regulatory
framework for dealing with utility assets that are stranded as a
result of the transition to a competitive electric industry.
Stranded costs are those costs incurred by a utility when a
customer stops buying power from the utility and, instead,
purchases transmission services from that utility to obtain power
purchased from another supplier.
APCo
Reference is made to page 16 of the 1993 10-K and page II-2
of the Quarterly Report on Form 10-Q for the quarter ended March
31, 1994 for a discussion of transmission service sought by
certain municipal customers. On May 24, 1994, APCo appealed the
February 10, 1994 order of the FERC to the U.S. Court of Appeals
for the District of Columbia Circuit. On July 1, 1994, the FERC
issued two orders. In the first, the FERC ordered the AEP System
to provide transmission services for these municipal customers.
In the other order, the FERC granted a complaint filed by the
municipal customers regarding the pricing of such transmission
services. On August 1, 1994, AEP System companies filed a
petition for rehearing of these FERC orders. In addition, on
August 1, 1994, the municipal customers began to obtain transmis-
sion service from the AEP System for 40MW of power purchased from
an unaffiliated utility, which had been previously supplied by
APCo.
AEP and I&M
Reference is made to pages 25 and 26 of the 1993 10-K for a
discussion of the disposal of nuclear waste from the D.C. Cook
Nuclear Plant. On June 20, 1994, a group of 14 unaffiliated
utilities owning and operating nuclear plants and a group of
states each filed a petition for review in the U.S. Court of
Appeals for the District of Columbia Circuit requesting that the
court issue a declaration that the Nuclear Waste Policy Act of
1982 imposes on the U.S. Department of Energy ("DOE") an uncondi-
tional obligation to begin acceptance of spent nuclear fuel and
high level radioactive waste by January 31, 1998. DOE has
indicated in its Notice of Inquiry of May 25, 1994 that its
preliminary view is that it has no statutory obligation to begin
to accept spent nuclear fuel beginning in 1998 in the absence of
an operational repository.
CSPCo and OPCo
Reference is made to page 34 of the 1993 10-K. Effective
June 1, 1994 thermal variances were issued for the Conesville and
Muskingum River Plants.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo
None
(b) Reports on Form 8-K:
AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo
No reports on Form 8-K were filed during the quarter
ended June 30, 1994.
<PAGE>
<PAGE>
In the opinion of the companies, the financial statements
contained herein reflect all adjustments (consisting of only
normal recurring accruals) which are necessary to a fair presen-
tation of the results of operations for the interim periods,
except for the adjustments resulting from the adoption of SFAS
115 an American Electric Power Company, Inc. and Indiana Michigan
Power Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized. The
signatures for each undersigned company shall be deemed to relate
only to matters having reference to such company and any subsid-
iaries thereof.
AMERICAN ELECTRIC POWER COMPANY, INC.
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Treasurer
AEP GENERATING COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
APPALACHIAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
COLUMBUS SOUTHERN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
INDIANA MICHIGAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer<PAGE>
KENTUCKY POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
OHIO POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
Date: August 12, 1994
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